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US Headlines Special 3: The Outcome
Headlines – 24/10/2016 - US Headlines Special
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As political campaigns are underway across the Western world in particular in Europe and America, knowledge, surveys, political perspectives and understanding are constantly changing. This week the Economic Times reported that during 2015, the European Union saw 1.25 million people seek asylum within the continent. This increase of over double the amount in comparison to 2014 comes ahead of a summit that is due to take place this week in Turkey regarding migrants. It will be interesting to see the approach the European Union takes in particular when they have fought to rigorously with the UK on migration matters over the last few months.
In America, Trump’s continuous controversy claims are causing a stir. Reuters reports that ‘Republican Ted Cruz's hopes of a sweeping nominating victory in his home state of Texas are being eroded as Donald Trump taps into conservative anger over immigration.’ Trump supporters have commented and sought to protect themselves from being branded racist or discriminative against immigrants by arguing that American resources cannot remain efficient if the influx continues.
In other news, the Labour party in the UK appear to be taking a leaf from Trump and concentrating on the issues that most concern the public. Hence, the labour party has embarked on a listening tour whereby they are asking individuals to comment on important to matters to them and their thoughts on labour’s actions towards the issues.
Offering a counter argument this week is former bank of England boss Mervyn King. The BBC reports on King’s considerations of the upcoming referendum in the UK with regard to the European Union, arguing the power and also strain that the Eurozone is having on the UK. With one of the main concerns of about leaving the European Union being economic, King stresses that even by staying the UK is still threatened by the failure of the Eurozone. Currently around 40 percent of UK exports go to Europe and in campaigners are arguing that this is at threat. However, with the Eurozone economy currently deteriorating, many including London major Boris Johnson, share similar views with King regarding the vitality of the economy in the Eurozone.
On the topic of the European slowdown, the Telegraph reports how this coming week is crucial for the Eurozone. It explains that ‘policymakers are widely expected to slash already negative rates and ramp up bond-buying measures by at least 10bn euros (£7.74bn) per month, as the ECB gathers for its latest meeting on Thursday.’ Nonetheless, whether this will actually be beneficial is questionable. The Telegraph explains that through these measures bank’s profitability is at risk as this will result in ‘the margin on what bank’s charge to lend and the interest they pay out on deposits.’ Consequently, this puts into question whether the ECB has actually achieved anything for recovery in addition to whether these issues are beyond their control. How much can monetary policy do? Is it time to give back the power to the countries and introduce fiscal spending?
Despite all the doom and gloom, there is some positive news for the Eurozone as Reuters reports that retail sales increased in January beyond expectation, let’s hope that although there was a setback in February, it does not continue this month and things improve.
The debate is heating up and opinions are being shared. The Independent argue that Boris Johnson, one of the politicians representing the ‘out’ side’ is correct in his argument. Nonetheless, David Cameron continues to argue that if the UK chooses to leave the European Union, its national and economic security will be threatened. Building on the already previously mentioned argument regarding the economy, the Independent picks on some key facts. It explains that whilst stress is placed on the trading relationship with Europe in which the UK shares, over the past twenty years, relationships and trade links have increasingly been built with other non-European countries. Moreover, the article also points to other economists and Prime Ministers regarding their standpoint on the European Union in particular Margaret Thatcher, a strong opponent to the European Union.
Solutions and perspectives seem to also be the subject this week with regard to the economy within the UK as a seven year milestone of record low interest rates was achieved on Saturday. Whilst this may be seen positively by some as it reduced the cost of borrowing in particular for those with mortgages, many are now arguing that it is time for an interest rate increase. However, it appears that the economy may not be ready for the rises as Carney had previously predicted late last year. The Guardian explains that ‘Carney says policymakers in the UK could cut interests to zero if necessary… Carney says the world economy has entered a low growth and low interest rates and is likely to be prone to financial shocks.’ Are we on the brink of recession?
Famous for not paying corporation tax, Facebook has declared this week and pledged to pay substantially more tax in the UK. Previously Facebook has only had to foot corporation tax bills of £4,327 (2014) despite great activity within the UK.
Meanwhile, Europe’s biggest banks are cutting 30,000 jobs reports Bloomberg. In the wake of more economic troubles in Europe, banks are attempting to pass on losses and financial difficulties through cutting jobs. Banks which have so far announced cuts include Standard Charter, Deutsche Bank as well as Credit Suisse. Bloomberg explains how Christopher Wheeler, an analyst at Atlantic Equities LLP in London thinks this is due to the lack of action taken by European banks following the financial crash. However, is the action they are now taking going to further harm the economy.
On the deal side, Reuters reports how the deal between Pesco and Exelon Corp is making good progress as ‘the two utilities have not extended the deadline to close the deal, and were in talks with state authorities.’ The deal has already won state approval in New Jersey and other states, as well as the U.S. Federal Energy Regulatory Commission however, it is just waiting for the go ahead in Washington DC.
The pessimistic outlook continues this week with regard as the global economic outlook also looks negative. Forecasts for both China and the US suggest the worst. Whilst China has cut its growth targets, reflecting the overall slowdown within the economy, Jim Rodgers, the Chairman of Rodgers Holdings has predicted that there will be a recession within the US in the next 12 months. Bloomberg explains that he reasons his theory on the fact that historically the US has experienced recessions every four to seven years. Meanwhile, China is doing everything in its power to maintain and ensure that the economy does not begin to shrink. If this fails, Rogders predicts that this could trigger a downfall in the US. China is currently seeking another five year plan explains Reuters as it attempts to create jobs and ‘restructure inefficient industries’. Will these actions work? Or is 2008 going to happen all over again? Let’s remain optimistic.
Positive? Negative? The view remains blurred as to whether the falling price of oil is a positive or negative on the world. Following the lifting of sanctions in January, Europe is going to see the arrival of the first barrels of crude oil since mid-2012, over the next seventeen days explains Bloomberg. This influx is likely to place other oil producers at threat in particular US shale oil producers as their cost of production is far higher. If the current reports are anything to follow, the Iranian oil is likely to cause a further crash to the price of oil on the market as it prepares to offload its excess supply onto tankers that will travel across the world. How much further could oil crash?