The World Today for June 23, 2017
NEED TO KNOW
Systems and Risk
China might soon learn the lessons of Bear Stearns and Lehman Brothers.
On Thursday, Chinese regulators suggested that marquee players in the world’s second-largest economy posed a threat to the financial system due to the complex web of debt they had assumed while acquiring assets abroad in recent years.
“Some big companies are indeed the focus of our attention on systemic risks because a big company has big risk exposure for banks and they could transmit to other companies,” China Banking Regulatory Commission official Liu Zhiqing told the Telegraph.
Regulators have asked banks to assess their exposure to debt held by mega-conglomerates like Fosun International and HNA as well as Anbang Insurance, cinema owner Dalian Wanda and machine tool maker Zhejiang Luosen, the BBC wrote.
Their shares plunged on Thursday, the New York Times reported.
Those companies have been throwing cash around like water with the permission of Chinese leaders who wanted the businesses to reinvest cash they generated from their exports.
HNA has spent $30 billion since last year buying stakes in the Hilton hotel chain, asset manager Skybridge Capital, Deutsche Bank and other companies, Bloomberg explained. Dalian Wanda has spent $10 billion on acquisitions, including Hollywood film producer Legendary Entertainment.
Now, as China’s economic growth has slowed, the country’s leaders are realizing the executives might have gone too far at a time when banks are already struggling.
Investors are gobbling up non-performing loans in China as more folks default, forcing distressed creditors to seek any payment from buyers who think they might gain from the same debt. That’s pushed prices of those bad loans up 30 percent this year, Bloomberg explained.
Beijing now seems determined to clean up the financial system.
Chinese authorities even detained Anbang Chairman Wu Xiaohui recently for undisclosed reasons, suggesting they wanted to learn more about where and how his firm acquired enough money for a spending spree that included purchasing the Waldorf Astoria Hotel in New York City for around $2 billion three years ago.
It’s possible these developments don’t auger another Great Recession, however.
“China is shifting from exporting to importing,” Alibaba Chief Executive Jack Ma told an audience in Detroit on Wednesday. “China is going to be the world’s largest consumption place and that engine is going to drive the world economy.”
That’s good news for Chinese officials seeking to head off a financial crisis.
Chinese consumers might come and rescue their economy if the debt-ridden tycoons can’t.
[siteshare]Systems and Risk[/siteshare]
WANT TO KNOW
Hey, Big Spender
At a summit meeting in Brussels on Thursday, the member nations of the European Union agreed to increase military cooperation with the joint purchase or development of equipment such as drones.
“The objective is to deliver capabilities, ensure a competitive, innovative and balanced basis for Europe’s defense industry across the EU,” the Associated Press quoted the 28-member group as saying in an official statement about the decision.
The move comes amid criticism from US President Donald Trump that members of NATO – 22 of which are also part of the EU – are not meeting the alliance’s defense-spending requirements.
Unlike in the past, the EU plans to draw up criteria and binding commitments over the next three months. The leaders also agreed to use EU funds to finance Europe’s battlegroups – small, expeditionary forces that were established in 2007 for quick deployment to troubled hotspots yet have never been used.
The group also agreed to a common defense fund that’s likely to generate around $5.6 billion a year from 2020 to invest in developing military equipment. While that’s not much compared with the activities of NATO, Belgian Prime Minister Charles Michel called it “an important step.”
[siteshare]Hey, Big Spender[/siteshare]
Saudi Arabia and other Arab nations that severed ties with Qatar earlier this month have issued a 13-point list of demands the Gulf nation must meet before they will lift what the Qatari ambassador to the US has called a “diplomatic, economic and social blockade.”
Presented to the Qataris by Kuwait, which is helping mediate the crisis, the list includes closing down the Doha-based news channel Al Jazeera, cooling ties with Iran and completely severing ties with the Muslim Brotherhood, the Associated Press reported.
Notably, Qatar has already said it will never meet some of the conditions mentioned in the list – including the closure of Al Jazeera.
Saudi Arabia, Egypt, the United Arab Emirates and Bahrain broke ties with Qatar this month, alleging that it funds terrorism. They also demand that Qatar refuse to naturalize citizens from those four countries, and extradite all individuals wanted by them for terrorism.
Qatar insists it does not fund terrorism and this is a “smear campaign” intended to “isolate and punish Qatar for our independence,” Qatar’s ambassador to the US wrote in an op-ed for the Washington Post.
Growing, and Growing
The world’s population will increase from today’s 7.6 billion people to 9.8 billion by 2050, as India surpasses China as the world’s most populous country and Nigeria eclipses the US for the number three spot.
Half of the world’s population growth over the intervening period will be concentrated in just nine countries: India, Nigeria, Congo, Pakistan, Ethiopia, Tanzania, the US, Uganda and Indonesia, Al Jazeera cited a new United Nations report as saying.
India will overtake China, which currently has a population of 1.4 billion, as early as 2024, the report said. Meanwhile, the populations of some 26 African countries will “at least double” by 2050.
NPR notes that around 800 million people already go to bed hungry around the world, mostly because a third of the food produced across the globe goes to waste. That’s enough to feed the entire 800 million with some left over. But the prospect of adding a full 2 billion more people raises serious questions about what it will take to feed them – and the environmental damage the effort will require.
[siteshare]Growing, and Growing[/siteshare]
Better with Age
The contents of ancient messages can be tantalizing and mysterious.
But sometimes, an ancient correspondence can be as simple as a reminder from one friend to another not to forget the wine.
In 1965, archaeologists in Israel discovered a piece of pottery dating back to 600 BC known as an ostracon, a medium commonly used to write letters and receipts.
Their initial analysis of the ancient Hebrew inscribed on the shard revealed banal exchanges between two men about money and God.
For over 50 years, archaeologists believed the flipside of the shard was blank. But in reality there was a hidden message there written in invisible ink, forgotten for more than two millennia.
Using multispectral imaging technology, archaeologists revealed more than 17 words on the back of the ostracon, including a request for vino, the New York Times reported. The researchers published their findings recently in the journal PLoS One.
They also found four other invisible lines of text on the front side of the shard detailing an exchange of silver and oil between the two friends.
[siteshare]Better with Age[/siteshare]
Threats to Press Freedom around the World.
The following selection is part of a new, regular feature on press freedoms brought to you in conjunction with the Committee to Protect Journalists.
The Deadliest Country of All
As of June 21, Iraqi forces had advanced on the mosque where Abu Bakr al-Baghdadi proclaimed himself caliph of the “Islamic State” three years ago, Reuters reported. The struggle to retake the city of Mosul, Iraq’s second largest city, has been deadly: Human Rights Watch estimates that between February and April of this year, at least 44 civilians have been killed in areas of Mosul controlled by the Islamic State group as a direct result of the offensive.
This week, two of those civilians were journalists.
Iraqi fixer Bakhtiyar Haddad and French photojournalist Stephan Villneuve were killed in an explosion that also injured French journalists Veronique Robert and Samuel Forey as they covered the conflict. The journalists were embedded with elite Iraqi soldiers, traveling on foot through Mosul when an improvised explosive device exploded, news reports said.
Haddad, an ethnic Kurd, had worked as a translator and fixer for French journalists in northern Iraq for more than a decade. Villeneuve and Robert were on assignment for the production company #5bisProduction, filming a report for the public broadcaster France 2. Forey is a freelance journalist who has regularly contributed to Le Figaro and the cultural magazine Télérama, among other media outlets.