October 18, 2017

Goldman Sachs prefers gold to bitcoin

Bitcoin worse than casino gambling – Russian economy minister

“Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts at Goldman Sachs wrote, as quoted by Bloomberg.

“They are neither a historic accident or a relic,” and are still relevant despite new assets like cryptocurrencies, they said.

As uncertainty in markets grows, the price of gold rises, they explained. In the long term, gold will gain because of the continuing demand in emerging markets, particularly in China.

Goldman analysts used several criteria to compare gold and bitcoin, including durability, portability, intrinsic value and unit of account. In three categories gold is better, losing to bitcoin only in portability.

“While both require expertise for correct long-term storage, gold wins because cryptocurrencies are vulnerable to hacking through online wallets or the user’s computer or smartphone, are subject to regulatory risk, and network and infrastructure risk during a crisis,” they said.

“Transferring bullion can be expensive, given its weight, need for a high level of security and high import taxes in some countries, such as India. In contrast, it’s much faster and cheaper to move bitcoins,” Goldman analysts added.

Gold has a limited amount, while it is difficult to control supply in case of cryptocurrencies; gold is better at keeping its purchasing power, and has much lower daily volatility, they said.

This year, bitcoin has rallied about 600 percent, starting the year at less than $1,000 and jumping to near $6,000. Gold prices have risen 12 percent. Bitcoin’s total values is approaching $100 billion, more than the market cap of corporations like Bayer, Goldman Sachs and Nike.

Article source: https://www.rt.com/business/407092-bitcoin-gold-goldman-sachs/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

‘Dr. Doom’ Marc Faber faces media ban for thanking God white people populated America

Dr. Doom warns of stock market selloff ‘avalanche’

“Thank God white people populated America, not the blacks. Otherwise, the US would look like Zimbabwe, which it might look like one day anyway, but at least America enjoyed 200 years in the economic and political sun under a white majority,” the financial analyst wrote in a newsletter in the October edition of his The Gloom, Boom Doom Report.

The comment, branded as racist, has led to a public backlash with major US media outlets rejecting Faber as a guest commentator.

“We do not intend to book him in the future,” said a CNBC spokesperson, as quoted by Reuters.

“Faber has not appeared on the network often, and will not be on in the future,” spokesperson for Fox Business Network said.

In response, the disgraced analyst told Reuters in an email: “What else would you expect? If stating some historical facts makes me a racist, then I suppose that I am a racist. Maybe I am wrong, and the US would be far more prosperous if the blacks had populated it, but then please explain to me why you would think so.”

Faber has reportedly left the board of a global asset manager Sprott. Mining companies NovaGold Resources and Ivanhoe Mines announced the departure of Faber from their boards of directors as well.

“The recent comments by Dr. Faber are deeply disappointing and are completely contradictory with the views of Sprott and its employees. We pride ourselves on being a diverse organization and comments of this sort will not be tolerated,” Sprott Chief Executive Peter Grosskopf said in a statement.

“Ivanhoe Mines disagrees with, and deplores, the personally-held views about race that Marc Faber has published in his current investment newsletter,” Ivanhoe said in a statement.

Article source: https://www.rt.com/business/407086-faber-doom-backlash-race-comments/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Johnson & Johnson wins appeal in $72mn talc cancer risk verdict

Huge talcum powder verdict opens floodgates for lawsuits against Johnson Johnson

The Missouri Court of Appeals for the Eastern District said the case over Alabama resident Jacqueline Fox’s death should not have been tried in St. Louis. The decision is based on a recent US Supreme Court decision which limited where personal injury lawsuits could be filed.

The Supreme Court said state courts could not hear claims by non-residents who were not injured in that particular state and where the defendant company was not based in that state.

A total of $307 million in judgments have been meted out by juries in St. Louis, Missouri, in cases filed by out-of-state residents.

JJ accused the St. Louis courts of being plaintiff-friendly and attempted to get cases brought by out-of-state plaintiffs dismissed.

The 2016 verdict for Fox’s family was the first of four jury awards totaling $307 million in state court in St. Louis to plaintiffs who accused JJ of not adequately warning consumers about the cancer risks of its talc-based products.

US pharma Johnson Johnson loses $110mn talc cancer case

The Missouri appeals court panel cited the Supreme Court’s decision in its ruling over the Fox case, who died four months before trial and who was named as one of 65 plaintiffs in her specific lawsuit, only two of which were Missouri residents.

“The fact that resident plaintiffs sustained similar injuries does not support specific jurisdiction as to non-resident claims,” wrote Judge Lisa Van Amburg.

The plaintiffs’ lawyer said the ruling “represents a denial of justice for the Fox family,” adding they were considering an appeal.

Alabama resident Jacqueline Fox died in 2015 at the age of 62. According to the lawyers, she died after using JJ’s Baby Powder and Shower to Shower for more than 35 years.

The $72 million awarded to Fox’s family by jurors included $10 million in compensatory damages and $62 million in punitive damages.

JJ said it is pleased with the ruling. The company is facing more battles in US courts with nearly 4,800 outstanding talc lawsuits.

Article source: https://www.rt.com/business/407085-johnson-cancer-case-reversal/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

A MacArthur ‘Genius’ on Overcoming Modern Farm Slavery

I went to Haiti after school and worked for three years with a peasant movement that was trying to build democracy. There was a remarkable effort by peasant organizations in the countryside, by unions in the cities, to mobilize a population that had never voted in a real election. I got to be a part of that process.

I learned Creole and came back to the States. Then a couple years later, my wife was working with farmworkers in Pennsylvania, and she got involved with some Haitian workers who were facing some pretty horrible conditions. They needed a translator, so I got involved. That was the first time I’d actually learned about what happened just beneath the surface of our food system. And it was pretty eye-opening.

How did you end up in Florida?

There was an opening in Immokalee at the legal services office. We worked in the community down here from 1991 on.

What do you find? How quickly does the picture start to fill in for you?

About as soon as you get to town. It was a very harsh, dog-eat-dog kind of world. You would regularly see people getting beaten in the parking lot on payday, by the crew leader or the crew leader’s henchmen, because they complained about not getting paid. Nobody would come to their defense.

Was it clear that some people were essentially slaves, being forced to work against their will?

We were doing simple outreach up in labor camps in South Carolina, and we came across people who said: “Can you help us get our pay? We didn’t get our final paycheck at the last place we were working.”

That happens a lot. So we said, “Sure, where were you working, and why didn’t you get that paycheck?”

“We had to take off a night because the police came” — because the crew leader had shot another worker who was telling workers in the camp that they didn’t have to work against their will, that they were free to work wherever they wanted.

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So this wage complaint, as you started to pull at the thread, became massive — hundreds of people, up and down the East Coast working in forced labor and in unimaginable conditions.

That was the extreme — slavery, modern-day forced labor — but generational grinding poverty, and pretty unconscionable labor abuse, was the norm.

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When did you start figuring out how you’re really going to root this out systemically?

We gradually realized that the power that set the parameters for farmworker poverty and the inhumane working conditions in the field didn’t reside here in Immokalee. It wasn’t something that we could confront face to face. It was actually at the top of the food system. There were these massive fast-food chains and supermarket chains that had an unprecedented level of market power over their suppliers. So they could demand lower and lower prices.

So we realized if we were actually ever going to have the ability to improve workers’ lives in a meaningful way, we were going to have to take the conditions that we saw and confront those corporations with those conditions.

Can you tell me about the Taco Bell campaign, which was the seminal campaign that showed you it was possible to do this?

Taco Bell’s target market was 18 to 24-year-olds. And 18 to 24-year-olds are people who still believe in justice, still believe change is possible. Students organized what was called the “Boot the Bell” campaign. At some campuses, Taco Bells were either removed or blocked from starting business, and I think that helped create a lot of pressure.

Eventually, to its credit, Taco Bell was the first to step up and say, “There are problems in agriculture, and we’re going to work with the coalition to fix them.” So they signed to pay the premium and to only buy from growers who comply with the code. That was in 2005. It took four years.

The Florida growers umbrella group — the Florida Tomato Growers Exchange — was opposed to it initially. How did it come around?

Yes, they were dead-set against it. There were actually a couple of farms that agreed to sell to Taco Bell, to pass on the “penny per pound.” But then that was brought to a halt when the F.T.G.E. said that any of its members who participated in the Fair Food Program would be hit with remarkably large fines. Growers stopped participating, and there was essentially a boycott for years.

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But what we did during that time was continue on two fronts. One was continuing to get more and more companies to sign Fair Food agreements, even if the program was halted. That included McDonald’s, Burger King, Subway.

On a parallel track, we continued our antislavery work. More and more cases were taken to court, working with federal authorities, and more and more crew leaders were put behind bars.

The names of a couple of farms where those workers were came out on the court record. And given that we had all these other companies that had signed agreements already, it was sort of a dual incentive that was facing the growers. One was there were all these buyers who had agreed they would only buy from growers who complied with the Fair Food Program. The other was that buyers were starting not to buy from growers that were implicated with an abuse.

What’s at the top of your priority list now?

Frankly, if we could stop campaigning today and dedicate all our resources to building the program out, extending its protections to tens of thousands more workers, we would prefer that infinitely to having to campaign to get companies to join. Unfortunately, we’re forced to continue campaigning. Some have shifted purchases to places where sexual violence against women is endemic.

I ask people to think of themselves at a farm stand with beautiful fruits and vegetables. When I ask people what they would do if they looked over the cashier’s shoulder and saw a woman being sexually assaulted in the crew leader’s truck, invariably, every single one says: “I would never by that fruit. I would do what I can to stop what’s happening.” Yet somehow when human beings come together to work as a corporation, the collective tolerance for outrageous abuse increases exponentially. That is what I can’t understand.

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Article source: https://www.nytimes.com/2017/10/18/business/economy/macarthur-genius-greg-asbed-ciw.html?partner=rss&emc=rss

Large section of Russian gas pipeline to China completed

Gazprom CNPC agree to start gas supplies via Power of Siberia in 2019

The company plans to build 1,300 km of the 3,000 km long pipeline to deliver Russian gas to China by the end of the year.

“As of today, over 1,095 kilometers of the pipeline are already built, which is 50.7 percent of the total length of its priority section from the Chayandinskoye field to Blagoveshchensk,” said Gazprom.

The Power of Siberia’s first section will run some 2,200 kilometers from the Chayandinskoye field (Yakutia) to Blagoveshchensk (Chinese border). The second phase of the project will include the construction of a section stretching for about 800 kilometers from the Kovyktinskoye field (Irkutsk Region) to the Chayandinskoye field. The third stage provides for expanding gas transmission capacity between the Chayandinskoye field and Blagoveshchensk.

Current work includes drilling gas wells, the construction of a comprehensive gas treatment unit and infrastructure facilities, and follow-up exploration of the oil rim.

The Power of Siberia pipeline is one of the biggest projects involving Russia and China. The deal took more than a decade to negotiate. In July, Gazprom and the China National Petroleum Corporation (CNPC) inked an agreement to start gas deliveries via the eastern route.

In May 2014, the two companies signed a $400 billion 30-year framework to deliver 38 billion cubic meters of Russian gas to China annually.

Moscow and Beijing plan to build another pipeline – Power of Siberia-2 or the western route that will deliver another 30 billion cubic meters of Russian natural gas.

According to the head of Gazprom Aleksey Miller, China’s growing gas consumption was more than 200 billion cubic meters last year and is expected to reach 300 billion cubic meters soon.

Article source: https://www.rt.com/business/407063-gazprom-power-of-siberia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

On Money: North Korea Is No Longer the Hermit Kingdom — but How Long Will China Be Its Lifeline?

Nor is North Korea as ossified as outsiders might imagine. Kim still wields the instruments of totalitarian power, but he has relaxed the state’s grip on the economy, allowing officials and ordinary citizens greater autonomy to make money and engage in trade, so long as a chunk of the profits flows to Kim’s inner circle. As a result, the North Korean economy grew 3.9 percent last year. Food prices have stabilized. Mobile phones have proliferated. And construction cranes now dot Pyongyang’s rising skyline. “North Korea is no longer a communist country,” says Justin Hastings, the author of the book “A Most Enterprising Country.” “Every state entity has been deputized to make money.”

The nebulous unit that supervises much of North Korea’s hard-currency trade is a Workers’ Party of Korea bureau with the Orwellian name Office 39. As sanctions become more onerous, North Korean companies, whether dealing with licit or illicit goods, have become adept at operating with multiple layers of disguise: false identities, fast-changing front companies, ships sailing under “flags of convenience” from places like Togo or Tuvalu. Office 39 doesn’t coordinate all this activity, recent defectors say; along with other departments, it acts more like a collection agency, setting dollar quotas that enterprises must meet by any means necessary.

Kim Kwang-jin, a defector who worked in Singapore for a bank affiliated with North Korea, says his firm met its quota by running reinsurance scams on factory fires, transportation accidents and other disasters. In 2003, Kim Kwang-jin told me, he arranged to send Kim Jong-un’s father and predecessor, Kim Jong-il, the annual quota as a birthday gift — $20 million in cash, stuffed into two heavy-duty bags. The Dear Leader was so pleased that he sent a thank-you note along with fruit, blankets and a DVD player. “North Korea has gotten more adept at hiding its tracks since then,” says Kim, who now works at a think tank run by South Korea’s intelligence service. “But it is also much more dependent on China.”

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The countries have a love-hate relationship. In the Korean War, the two newly formed Communist states forged a bond that Chairman Mao Zedong claimed was “as close as lips and teeth.” But Kim Il-sung, who was nearly killed by Chinese allies in the 1930s, feared that China would take over his country at the end of the war. Decades later, when the Soviet Union, its main benefactor, collapsed North Korea had nowhere to turn but China and felt betrayed when Beijing established ties with South Korea in 1992. China now accounts for more than 80 percent of North Korean trade, yet Kim Jong-un — channeling his grandfather’s resentment — openly defies Beijing, accelerating his nuclear-weapons program and even timing missile tests to embarrass President Xi Jinping.

Until now, the calculus in Beijing has been guided by caution. Push North Korea too hard, the reasoning goes, and the resulting conflict or collapse could lead to millions of refugees pouring into China and a united, America-aligned Korea becoming entrenched on its doorstep. Now the balance may be shifting. Alarmed by Kim’s nuclear provocations — and perhaps pressured by the Trump administration — China is acting tougher on sanctions. In the past month, it has stopped trucks filled with North Korean seafood, ordered Chinese banks to drop North Korean clients and vowed to shut down North Korean companies. Some North Korean workers in northeast China are already heading home. As James Reilly, an associate professor at the University of Sydney, puts it, “China has really crossed the Rubicon.”

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Credit Illustration by Andrew Rae

Yet there are serious doubts about how far China is willing to go. And because North Korean enterprises rarely leave their fingerprints on overseas bank accounts or companies, how tough can Beijing’s enforcement be? To skeptics, China’s late conversion signals not a commitment to sanctions but a desire not to be scapegoated by Washington, where the default position has long been that China is responsible for its wayward little brother. “China is not the only country that matters,” says Andrea Berger, a North Korea expert at the Middlebury Institute of International Studies at Monterey. “North Korea has a big footprint overseas, so we have to look at its networks around the world, too.”

North Korean trade outside China is deep and varied, its value often underestimated. Russia employs tens of thousands of North Korean workers in construction sites and Siberian logging camps even as it helps Pyongyang evade sanctions on oil imports. In Africa, where North Korea formed strong bonds during the independence struggles, the most visible signs are the massive statues built for leaders and dictators by North Korea’s state art studio, Mansudae. Behind these monuments is a bustling trade in arms, minerals and manpower, often aided by embassy staff. Only rarely are shipments stopped. Last year, though, Egyptian customs agents found 30,000 North Korean rocket-propelled grenades hidden under a mound of iron ore on a ship bound for their country, a United States ally. Since then, the Trump administration has withheld almost $300 million in aid and military funding from Egypt.

United Nations’ sanctions are now targeting one of the most lucrative enterprises: the export of quasi slave labor. An estimated 100,000 North Koreans are toiling around the world in abysmal conditions: 12-to-16-hour days under constant surveillance, their wages and freedom confiscated by the state. “North Korea is exporting crimes against humanity,” says Remco Breuker, a Dutch historian who led an investigation of companies using North Korean workers in Europe. These laborers can be found in roughly 40 countries, from shipyards in Poland to building sites in Qatar — to the little restaurant in my neighborhood.

When the disco lights at Pyongyang Okryu flashed on, our waitress appeared onstage in a lime green dress, crooning a North Korean melody. Two others danced beside her with little sense of rhythm or joy. Last year, 12 waitresses and a manager working in a restaurant in Ningbo, China, defected en masse, so the control over workers’ lives is reportedly even tighter now. Unlike my last visit to a North Korean restaurant, there were no homages to the leader, no conga lines to “Country Roads.” But near the end of the show, our waitress donned a traditional gown and played the 21-string gayageum, a kind of zither dating back to medieval times, when her Korean ancestors reigned over part of what is now China. After paying the bill — a hefty sum for Bangkok — I carried my sleeping son out and the waitress patted his head. I may be wrong, but I think I even detected a genuine smile.

Brook Larmer is a contributing writer for the magazine. Next Week: On Medicine, by Siddhartha Mukherjee

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A version of this article appears in print on October 22, 2017, on Page MM18 of the Sunday Magazine with the headline: No longer the Hermit Kingdom of old, North Korea is enmeshed in global trade — in ways that often help it evade international sanctions.

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Article source: https://www.nytimes.com/2017/10/18/magazine/north-korea-is-no-longer-the-hermit-kingdom-but-how-long-will-china-be-its-lifeline.html?partner=rss&emc=rss

France Considers Fines for Catcalls as Women Speak Out on Harassment

Marlène Schiappa, a feminist and writer who is France’s junior minister for gender equality, said on Monday that the government was considering precisely how to define street harassment and how much to fine. The government would consult legal professionals on its proposals and hold workshops for citizens across the country, she said, aiming to put measures before Parliament next year.

Speaking to RTL radio, Ms. Schiappa said she had been deeply struck by the response to the #BalanceTonPorc hashtag.

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The French journalist Sandra Muller, who began the #BalanceTonPorc (“Expose Your Pig”) hashtag for women to share their experiences of sexual harassment. Credit Angela Weiss/Agence France-Presse — Getty Images

“We all have stories of harassment and assault,” she said, adding: “One of my best friends said something with this hashtag that she had never told our group of friends. This hashtag, with the barrier created by a screen, can help people speak out, and I think that it is truly beneficial.”

Some commentators argued that sexual harassment accusations would be better handled in a courtroom than on social media. “Denouncing sexual harassment on a social network with a hashtag isn’t the appropriate place at all,” said Christophe Noël, a labor lawyer. “It can rebound on the accuser and create an open door to excesses and defamation.”

Ms. Muller, the journalist who first tweeted the “Expose Your Pig” hashtag, said in a phone interview on Tuesday that although she was overwhelmed by the hundreds of reactions she had received, she didn’t want Twitter to become a tribunal. “I’m not a judge,” she said.

Two lawyers for the executive Ms. Muller named in her tweet demanded on Tuesday that she delete it; one of the lawyers, Nicolas Bénoit, called her accusation a case of defamation but declined to comment further. The executive didn’t respond to requests for an interview.

In France, the Weinstein affair has recalled the case of Dominique Strauss-Kahn, the former International Monetary Fund chief and one-time presidential contender who was arrested in New York in 2011 and accused of assaulting a hotel housekeeper. Those charges were dropped, but helped dent a longstanding French reluctance to breach the privacy of public figures, no matter their sexual transgressions.

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Sandrine Rousseau, a former leader of the French Green Party and leading advocate for victims of sexual harassment, said the Weinstein case had particular resonance in France because women had suffered in silence for so long.

Ms. Rousseau was one of a dozen women who in 2016 accused a Green Party legislator, Denis Baupin, of sexual harassment, saying he had pushed her up against a wall and kissed her against her will. Mr. Baupin, who resigned as vice president of France’s National Assembly, denied the accusations and the case was dropped on the grounds that too much time had elapsed.

“DSK was the first blow, and Baupin the second one,” Ms. Rousseau said in an interview, referring to the initials of Dominique Strauss-Kahn. “The Weinstein revelations have had a strong echo in France, because what used to be seen as naughtiness is now being considered as sexual harassment.”

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Dominique Strauss-Kahn, former head of the International Monetary Fund, faced accusations of sexual assault in 2011. The charges were later dropped. Credit Fred Dufour/Agence France-Presse — Getty Images

Ms. Rousseau said “Expose Your Pig” was a good start, but words needed to be translated into action and successful legal cases remained rare. According to a 2016 study by Ifop, a leading pollster, just 65 of the 1,048 sexual harassment lawsuits in France in 2014 led to a conviction.

But the atmosphere may be changing. In December, Georges Tron, who was a mayor and a government official under former President Nicolas Sarkozy, will stand trial on accusations of rape and sexual harassment after two women said he had assaulted them in a locked room in the town hall when he was mayor of Draveil, south of Paris. Mr. Tron resigned in 2011 over the accusations, which he denies.

In Europe, several countries have moved in recent years to criminalize sexual harassment, including Portugal where the left-leaning government in 2015 made verbal sexual abuse a crime with a fine of up to 120 euros, or about $142. Belgium has also moved against sexual harassment, and in 2014 introduced penalties including a jail sentence of up to one year for remarks intending to express contempt for a person because of his or her gender.

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In a sign of how French mores have evolved, President Emanuel Macron on Sunday announced that he had begun the procedure to strip Mr. Weinstein of France’s highest award, the Legion of Honor, which he had received in 2012 for his work promoting foreign cinema in the United States.

Brigitte Macron, the French first lady, has congratulated victims of sexual harassment or violence for sharing their stories, and she expressed hope that something positive could come out of the “bad” of the Weinstein affair.

Several French actresses are among the more than two dozen women who have stepped forward with accusations against Mr. Weinstein, among them Florence Darel, Judith Godrèche, and Léa Seydoux, who starred in the James Bond film “Spectre.”

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Ms. Seydoux wrote in The Guardian newspaper that when she first encountered Mr. Weinstein, he asked her to meet him for a drink and that he invited her to his hotel room.

“It was hard to say no because he’s so powerful,” she wrote. “We were talking on the sofa when he suddenly jumped on me and tried to kiss me. I had to defend myself. He’s big and fat, so I had to be forceful to resist him. I left his room, thoroughly disgusted.”

She added: “I wasn’t afraid of him, though. Because I knew what kind of man he was all along.”

Aurelien Breeden contributed reporting.

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Article source: https://www.nytimes.com/2017/10/17/world/europe/france-harassment-twitter-weinstein.html?partner=rss&emc=rss

Economic Scene: Why the Trade Deficit Matters, and What Trump Can Do About It

As C. Fred Bergsten, founder and director emeritus of the Peterson Institute for International Economics, told me, “Even if the deficit is financeable it is not sustainable in domestic political terms.”

The trade deficit’s political power raises a question that seems overdue: Why has an advanced nation like the United States allowed such large imbalances to persist for such a long time? Perhaps there is a case for policy makers in Washington to do something to narrow the gap.

American Imbalance

The United States’ large and persistent current account deficit — the broadest measure of its trade in goods and services — is an anomaly among rich countries. The main reason for the deficit, economists argue, is the strong dollar.

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By The New York Times | Sources: Organization for Economic Cooperation and Development (account balance); Federal Reserve Bank of St. Louis (dollar)

The American current account deficit — the broadest measure of the balance of trade in goods and services — is an anomaly.

Economists’ standard explanation of international trade says that rich countries like the United States will export capital, of which they have a lot, lending to poorer nations that have little capital but a lot of cheap labor. These poor countries, in turn, will invest the borrowed money in American-made machines for factories in which to employ their workers. So the lending will generate exports for the United States — building a trade surplus.

Most developed nations adhere to this pattern most of the time. The European Union now has a current account surplus. If it weren’t for the United States, so would the G7 group of major industrialized countries. But since 1980, the United States has found itself mostly on the borrowing end of the deal. It has used the foreign capital to finance investment at home, racking up huge trade deficits along the way.

Some economists will argue that the trade deficit is ultimately irrelevant if there is sufficient money coming in from abroad to pay for it at a reasonable interest rate. So what if China owns a ton of Treasury bonds? Even fears that it might dump them to hurt the United States ignore that China has little incentive to do that. It would amass enormous losses, too.

But it is a mistake to ignore the wounds caused by persistent trade imbalances on American workers.

The trade deficit hasn’t had a uniform effect across the economy. As it soared over the last half century, it was workers in industries that compete with imports — like manufacturing — who lost out. And employment shifted to industries that were not exposed to trade.

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Even if trade with China did not reduce overall employment, convincing new research shows that the two-decades-old flow of imports from China caused lasting damage to communities where industries that competed with Chinese goods lost out and whatever new jobs emerged couldn’t match the quality of those lost.

The money from China that financed the American trade deficit also financed the housing bubble, holding interest rates down in the run-up to the financial crisis of 2008. “China did not force our banks to make stupid subprime loans, but it enabled the macroeconomic conditions,” Mr. Bergsten said.

The combination, Mr. Bergsten suggests, produced the protectionist backlash that delivered the presidency to Mr. Trump.

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President Trump with a signed memorandum in August calling for a trade investigation of China. Credit Tom Brenner/The New York Times

For all the angry rhetoric, there is little in Mr. Trump’s campaign against foreign trade that might help turn around the nation’s trade balance. Pulling out of trade deals won’t do it. At best, this will reroute trade to other countries. His rallying cry against China’s purposely weakening its currency — long a favorite on Capitol Hill — is pointless at a time when China is trying to push the value of the renminbi up, not down.

The United States has run large trade deficits when its trading partners were manipulating the currency and when they weren’t. It ran large trade deficits when President Ronald Reagan ran large budget deficits. It ran them again when the Clinton administration turned the budget deficit into a surplus — a change that should have increased national savings, economists argued at the time.

Economists argue that the deficits will stop when Americans stop consuming and investing more than they earn, reducing the demand for money from overseas. But that is easier said than done.

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The one straightforward recommendation to address the trade deficit would be for Mr. Trump to do something he surely won’t: drop the rest of his promised economic agenda, starting with his multitrillion-dollar tax cut, which would reduce national savings and make the trade deficit balloon.

But slashing the trade deficit for good will be very tough. That would require weakening the American dollar, the reserve currency of the world. That would be no easy task.

The dollar is the main currency used in global trade, as well as international capital market transactions. People and governments the world over store their wealth in American stocks and bonds. What’s more, the dollar is the go-to currency in the time of financial crises, even if the crises at hand are centered in the United States. Against these forces it is hard to keep the dollar down.

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Still, there is a promising path that Mr. Trump could pursue. The United States tried it before, two years before he ran his ads bashing Japan. The budget deficit was bloated. The dollar was soaring. And at the Plaza Hotel in New York, Treasury Secretary James Baker convinced Japan and West Germany that it was in their best interest to help the dollar fall.

All Mr. Baker had to do was convince his counterparts that if they didn’t play they might risk protectionist moves from Congress. And by 1989, the dollar had fallen 50 percent against the Japanese yen and more than 40 percent against the West German mark.

This kind of approach seems like a perfect fit for Mr. Trump, who tends to enjoy making threats. If he did so, the trade deficit might even close. In 1991, the United States even ran a current account surplus for two full quarters.

Email: eporter@nytimes.com; Twitter: @portereduardo

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Article source: https://www.nytimes.com/2017/10/17/business/economy/trade-deficits-nafta.html?partner=rss&emc=rss

In Czech Election, a New Threat to European Unity

Whether a wealthy oligarch with vast financial interests would prove as illiberal as Viktor Orban, Hungary’s populist prime minister, and Jaroslaw Kaczynski, the leader of Poland’s governing right-wing party, remains uncertain in a country as secular and Western-oriented as the Czech Republic. But Mr. Babis has suggested abolishing the Czech Senate and trimming the lower house of Parliament, moves that would strengthen the executive branch.

Following a pattern that has become familiar in European elections, the Czech vote pits longstanding mainstream parties in decline against anti-establishment upstarts from all corners of the political spectrum.

The youth-dominated Czech Pirate Party, which began in 2009 by calling for using the internet to streamline democracy, has seen its support in polls cross the 5 percent threshold to qualify for Parliament.

On the far right, Tomio Okamura — a half-Czech, half-Japanese entrepreneur whose Liberty and Direct Democracy Party opposes immigration, and calls Islam an ideology rather than a religion — drew 6.9 percent in the last election and is expected to do better this time around.

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Ivan Bartos, the leader of the Czech Pirate Party, at a rally in Klatovy this month. The youth-dominated party has seen its support in polls rise above 5 percent, the threshold to qualify for Parliament. Credit David W Cerny/Reuters

Mr. Babis refers to his party, Ano, as a movement to overturn a culture of corruption among the political elite. Ano means “yes” in Czech, but it is also an acronym for Action of Dissatisfied Citizens. Its slogan is simple and vague: “Things will get better.”

Mr. Babis’s movement, formed in 2012, stunned the establishment by finishing second in parliamentary elections the following year, a strong enough showing to propel him and several supporters into major roles in a coalition government with the center-left Social Democratic Party and the center-right Christian Democratic Union. Mr. Babis served as finance minister.

But this spring, with Ano surging in popularity, the coalition fractured. Mr. Babis was investigated over possible tax crimes. His parliamentary immunity was revoked. He was fired as finance minister. And this month he was indicted on charges of misusing European Union subsidies — accusations that he calls politically motivated.

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“The other parties are trying to push Babis out of politics, but it hasn’t worked,” said Pavel Fischer, the director of Stem, a nonprofit polling and research group in Prague.

President Milos Zeman, a populist with strong ties to Moscow, has said that if Ano wins, he will name Mr. Babis prime minister — even if Mr. Babis is in prison.

Ano still leads the polls, helped in no small measure by the oligarch’s grip on the Czech media. He owns or controls the two most popular newspapers, which regularly praise his efforts and denigrate opponents, as well as a popular radio station and a television network.

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“He has tremendous power,” said Otto Eibl, a political scientist at Masaryk University in Brno. “So the concentration of power in Babis’s hands is enormous and some people are nervous about it. And they are right.”

But Mr. Babis has been difficult to pin down on the issues. He opposes sanctions on Russia and seeks more trade with Moscow. He does not want to adopt the euro. He is fiercely resistant to accepting refugees, especially Muslims.

He also controls a conglomerate with interests in agribusiness, forestry, food processing and chemicals that stretches across several European countries. A Bloomberg index of global billionaires puts him at No. 492, with an estimated worth of nearly $4.1 billion.

And he is careful to keep his Brussels-bashing on the vague side.

“Babis’s position on the European Union is not clear, because he is not talking about it most of the time,” Mr. Eibl said. “Sometimes he is forced to say something, but he usually avoids such topics.”

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How Far Is Europe Swinging to the Right?

Right-wing parties have been achieving electoral success in a growing number of nations.

Like other former communist nations, the Czech Republic had to create new parties from scratch after the fall of the Soviet Union. Center-left Social Democrats lined up against center-right Civic Democrats, with the remnants of the Communist Party hoping for a return to power.

For more than a decade, with the economy rising at a brisk clip, voters seemed content to pass power among them. But the 2008 financial collapse shattered the equilibrium.

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“Now, Czech voters are weary of traditional parties,” Mr. Pehe said. “And we see the rise of these populist movements.”

Antonin Gold, a real estate agent with no political experience, stood outside a subway station this month, wearing a badge identifying him as an Ano candidate for Parliament.

Mr. Gold said he had become so upset by news reports about yet another corruption investigation that he decided to join Mr. Babis’s movement.

“I didn’t think I could ignore it any longer, and I had to take action,” Mr. Gold said, pressing a leaflet into the hands of a woman scurrying past. He shrugged off the corruption charges as a move by the political establishment to cling to power.

Polls show Ano drawing 25 to 30 percent of the vote, well ahead of the second-place Social Democrats, though predicting the outcome is complicated.

“Many people still are not sure who they will vote for,” Mr. Fischer said. “The last days will be crucial.”

For his part, Mr. Babis has gone back and forth on comparisons with Mr. Trump, initially calling himself a much better businessman than the American president but later finding more to like in Mr. Trump’s hard line on immigration.

Mr. Okamura, of the far right, certainly sees a connection between his approach and Mr. Trump’s.

“I say we must make the Czech Republic good,” Mr. Okamura said. “Not great. I wanted to choose a word that Trump had not chosen. But of course, great would be fine.”

Hana de Goeij contributed reporting.

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Article source: https://www.nytimes.com/2017/10/17/world/europe/czech-republic-andrej-babis.html?partner=rss&emc=rss

Spain cuts 2018 growth forecast as Catalonia crisis weighs

Spain hopes mass business exodus ends Catalonia’s independence dream

In a letter sent to Brussels, the Spanish government said it was down to the economic cycle as well as “a slight containment of domestic demand, resulting from the negative impact of the uncertainty associated with the current political situation in Catalonia.”

Prime Minister Mariano Rajoy has warned Catalan leader Carles Puigdemont about the economic impact of the crisis.

“The latest steps taken by you and your government are causing a major divide in Catalan society, as well as enormous economic uncertainty that threatens people’s well-being,” Rajoy wrote to Puigdemont on Monday.

The Spanish government gave Catalonia’s leaders until Thursday to pull back the independence bid or face the possibility of direct rule from Madrid.

The eurozone’s fourth-largest economy is undergoing its most serious political crisis since the independence referendum in Catalonia on October 1, where more than two million people voted to break away from Spain.

The uncertainty is harming business confidence in Catalonia. The two biggest Catalan banks were among dozens of companies that have moved their legal headquarters to other parts of Spain.

Catalonia is Spain’s most economically productive region, hosting 7,100 multinationals, including Volkswagen, Nissan, and Cisco. It generates about 20 percent of the country’s GDP and contributes 21 percent of its total taxes.

Losing Catalonia would deprive Spain of about 16 percent of its people, a fifth of its economic output and more than a quarter of its exports.

Analysts say the mass exodus of companies would cause devastating economic consequences for the region, raising fears a prolonged crisis could damage the national economy.

International rating agencies Standard Poor’s and Fitch have said they are considering downgrading the region’s credit score.

Article source: https://www.rt.com/business/406949-spain-economic-forecast-catalonia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS