Free Speech : Speak Freely at Eloquation

Brexit Talks More Likely To Impede Economic Growth Of Britain and EU

Feb
25

The Brexit vote has affected the economic growth of Britain to a great extent. With a hard Brexit imminent, the United Kingdom is likely to lose its single market. Many experts predict that the loss for the European Union will be greater than that of Britain as a result of Brexit. The EU expects an overall economic slowdown in Britain, but according to forecasts, the whole bloc will improve its economy even though there are numerous uncertainties.

The Winter Economic forecast was released by EU. According to the forecast, Britain’s economy will fall from a gain of 3.1% in 2014. It will reduce by 1.5% in this year and another 1.2% in 2018. Surprisingly, the economic growth of EU is forecasted to improve during Brexit talks. In 2014, the growth was 1.6% and EU’s economy is expected to gain 1.8% for this year and 2018. Growth is evident from the activities and the deficits along with unemployment rates have gone down recently.

The economic growth for the United Kingdom is projected to be steady in 2017 while it is expected to decline in 2018. As the UK severs itself from the European Union, it has to undergo major political and economic changes. The Brexit negotiations will take at least two years to finalize the deal. During this period, the economic growth is expected to decline. While the decline may not be severe immediately, there will be a notable decline in growth in 2018.

Greece is also under the radar due to is crumbling debt position. The forecast figures were however not as disheartening as it was expected. The EU hopes that Greece will find a way to negotiate with the creditors so that the total debt load decreases. Greece is expected to borrow huge bailout loans before July, but a solid agreement must be made. The Eurozone finance ministers are expected to meet on next Monday in Brussels. The financial situation of Greece is in dire need of a helping hand. The European Union has hopes for the country while International Monetary Fund feels that the debts of Greece are unsustainable.

The USA contributes the maximum to the International Monetary Fund. The President Donald Trump has expressed his concerns about the future of Greece. This means that Greece may not receive all the help it needs from IMF. The European creditors are already burdened with uncertainties and they won’t be interested in adding to it. So, Greece is expected to wrangle a good deal out of its creditors.

In France, Marine Le Pen won the presidential elections and this could also threaten the French economy. Le Pen campaigned effectively to disassociate France from EU and usage of the euro currency. Experts suggest that this can influence the European Union in several ways, while it can be majorly problematic for France.

Despite the numerous uncertainties, the European Union as a whole bloc is economically growing stronger. It is not the same for individual nations that have been in the EU for a few decades.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Edison and Tesla Joint Venture Opens World’s Largest Battery Storage Project

Feb
20

Southern California Edison and Tesla Motors Inc. joint venture opened the world’s largest battery storage project at the company’s Mira Loma substation located in Ontario. This gigantic battery storage grid is being hailed by regulators as a critical element to reducing dependence on fossil fuel.

This new grid at Mira Loma substation built specifically to cater to peak hour needs has about 400 Tesla PowerPack units arranged on a 1.5-acre area. This battery grid has the capacity to store enough energy to power 15,000 houses for four hours or 2,500 houses for an entire day.

This grid utilizes lithium-ion batteries to collect and store electricity during off-peak hours and during the nights. These batteries looking like huge white refrigerators then inject the stored electrons back into the grid for use during peak times.

Edison and Tesla had inked the joint venture deal during the month of September in an effort to make up for the shortfall of power triggered by the faltering operations of the natural gas storage facility at Aliso Canyon.

At a ribbon cutting ceremony to inaugurate the plant, California Public Utilities Commission’s President Michael Picker said that this plant has come up in an unprecedentedly short time.

He added that the speed at which innovations in the realm of electricity delivery is happening that his offices are also not able to keep track of the changes. Mr. Picker said, “The innovation taking place occurs faster than we can regulate.”

Other similar battery storage facilities are also in the offing in an effort to improve the efficiencies of storage plants and to reduce the release of pollutants that are an unavoidable part of natural gas storage facilities.

Other similar plants are being rolled out by joint ventures between AES Energy Storage and San Diego Gas and by Altagas and Greensmith Energy Partners. These upcoming projects are expected to add about 77.5 megawatts of energy storage facility to California’s electricity grid thereby helping to ease the peak hour demands.

California is currently operating under a mandate for producing half of its requisite energy through renewal sources such as wind and solar by the year 2030. The mandate also includes reducing greenhouse gas emissions to below 1990 levels which translate to 80% by 2050.

In the process of achieving these climate-change numbers, California was missing out the key element of having cost-effective facilities to store excess energy produced by wind and solar energy production plants for use during times when the sun and/or wind was not available for harnessing energy.

Storing harnessed energy for use in the future has always been a costly venture. However, experts are of the opinion that the times are changing and storage costs could reduce as both demand and competition increase.

Ravi Manghani, the director of GTM Research energy storage segment, said, “As the storage matures and the cost comes down further … more and more products will come online.”

Kevin Payne, the CEO of Southern California Edison said that the present project is not a pilot project but part of a vision to achieve clean energy targets for California.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Border Tax May Not Have Serious Effect On American Companies

Feb
06

When President Trump wanted Mexico to pay for the expensive wall on the American-Mexican border, Mexico denied with all its might. So, Trump proposed the introduction of border tax which will make the imports from Mexico 20% more expensive. This additional tax will help the construction of the wall. However, the American companies fear for their future when the border tax comes into existence.

Recently, President Trump announced that his plans on announcing reforms to reduce overall tax burden will be revealed in two to three weeks. This has spiked the interest of the investors and the stocks surged. The tax reforms will make the exports cheaper and imports expensive. Combined with border adjustment tax, this could mean that the companies relying on imports will suffer greatly due to the reforms. So, car dealers, retailers, oil refiners and others who follow an import based business model vehemently oppose border tax. On the other hand, Boeing, General Electric and Dow Chemical which export predominantly welcome the border tax. Both the groups are spending millions of money in support of and against the border tax.

The House GOP plan is to introduce destination based border adjustment tax which will tax all the economic activities in the USA only. Exporters will be exempted from tax for selling goods overseas. Importers will not receive tax deductibles for spending on importing goods from other countries. The corporate tax will reduce to 20% from the current 35%. This new proposal will make the importers pay 20% more tax.

Economists have a very different opinion on the issue. The impact of tax rates won’t just affect the imports and exports. The exchange rates of the dollar will also be affected by this. As a result, tax cuts will result in appreciation of the dollar. This means that imports have to spend the same amount of money even with a border tax. Exporters have to lower the prices of their products to make their products affordable in foreign countries. So, in the end, importers and exporters will experience no notable change with the border tax.

The prediction of the economists is not just on paper. The European countries faced a similar adjustment when border adjustment was proposed. The value added tax programs introduced a new tax regime, but the cost for the businesses wasn’t affected by the change. So, the economists want the importers and exporters to stop panicking because there won’t be a massive change in their operational cost due to the border tax.

At the same time, no country has ever used a proposal similar to the House GOP. This means that nobody can be sure of the effects of the border adjustment tax in the current context. This keeps the American companies on edge because the exporters are set to gain from the tax reforms while the importers will suffer more. The economic situation in the country will change in a massive way and it could get ugly for certain businesses.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

U.S. Economy Expands at Fastest Rate in Two Years

Nov
18

united states flagThe economy of the United States grew at the fastest pace in two years during the third quarter, although analysts say a lot should not be read into the growth yet.

The Commerce Department reported on Friday that gross domestic product (GDP), the broadest measure of output in the economy, expanded at an inflation-adjusted annual rate of 2.9 percent. This was a marked improvement on performance in first half of 2016.

The growth recorded in the July-September quarter was the highest quarterly reading since the same period in 2014, when the economy expanded by 5 percent. It halted a streak of three straight quarters of less than 2 percent growth.

The two-year-high reading was driven by a surge in exports, propelled by improved soybean shipments to South America.

“Some of that surge was due to a one-off spike in soybean exports,” said Paul Ashworth, Capital Economics’ chief U.S. economist. “But it is still a welcome sign that the dollar appreciation in 2014 and 2015 is no longer weighing on exporters.”

Increase in exports surpassed than of imports during the quarter, jumping by 10 percent – the best reading in almost three years.

Change in private inventories was also a driver of the improved growth reading. The GDP component, which had failed to impress in the previous five quarters, added 0.61 percent to the rate of growth in the July-September quarter.

Certain underlying information, however, suggests the high growth rate is not one that may be sustained in the coming quarters. Business investment and consumer spending remained sluggish while home construction market contracted during the quarter.

Chief of U.S. Macroeconomics at Oxford Economics, Gregory Daco, expects the economy to slow to about 2 percent growth during the final quarter of this year.

“Going forward, we expect a modest expansion in economic activity, but we note the economy may be in a fragile equilibrium,” he stated in a research note.

An important measure of business investment climbed 1.2 percent, as companies spend more on structures while reducing expenditure on equipment.

Consumer spending improved at a rate of 2.1 percent, which was about half the pace recorded in the second quarter.

With the U.S. presidential election drawing ever so close, the two parties involved have tried to score points based on the latest economic growth information.

The campaign of Democratic candidate Hillary Clinton said the figures were signs of “real progress” following three consecutive quarters of growth that averaged about 1 percent. It was stated, though, that more work still needed to be done “to build an economy that works for everyone.”

The Republican Donald Trump campaign said growth seen in the last quarter was another confirmation of the need for a change in policies. Dan Kowalski, deputy director of the campaign, noted that growth has not surpassed 3 percent in any full year since President Barack Obama began his tenure.

The U.S. economy has grown annually at an average rate of 2.1 percent since the end of the 2008-09 recession.

The economy expanded at a pace of 2.6 percent in 2016. Latest data doesn’t suggest the rate for this year will be close to that, especially after the dismal performance in the first half of 2016.

Economists predict a 1.6 percent growth for the full year, as reported by Southeast Missourian.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Lawyer Urging Ban of Bad Credit Personal Loan Advertisements

Nov
13

LawyerThe payday loan industry has been placed under a microscope in the United Kingdom. Policymakers are concerned that these short-term, high-interest loans send the most vulnerable into financial destitute. This is why the Financial Conduct Authority (FCA) has rigorously been reining in the industry since 2013.

But one Liverpool attorney wants the government to take one step further: ban payday loan ads.

For years, one of the common concerns among British officials and households is the ubiquity of payday loan advertisements seen on television, especially when they’re aimed at the youth and unemployed.

Last week, the Liverpool government’s announced that it would start to review marketing schemes launched by gambling organizations. Solicitor Sean Rogers is now urging public officials to also initiate a review in the advertising practices of payday loan businesses that can harm youths.

Rogers, who is head of Refund You Solicitors, a group that helps young people get compensated for being misled on payday loans, says daytime advertisements from businesses who offer personal loans at Landmark Cash are a big problem that many young people come across. This is a time when payday loan commercials are more prevalent than at any other time.

He told the Liverpool Echo that there are numerous scenarios where payday loan businesses approve applications submitted by “vulnerable people” without proper background checks and procedures to determine if the potential customer can actually pay back the principal sum and interest charges.

“In many cases, the lenders did not stop to question whether a young person could afford the repayments once other commitments were taken into consideration,” he said. “Loans were dished out to young people, many of whom may have already had a poor credit history. “In many cases this leaves people in dire financial straits because they were locked into loans with very high interest rates with no hope of paying it back.”

Ultimately, Rogers is requesting that the government begin to turn its attention to pre-watershed payday loan advertisements and not just gambling commercials. By doing this, he says, more young people will not fall for the false claims being perpetrated by payday loan facilities that make grandiose promises.

Earlier this year, it was reported that nearly half of young people use payday loans. And, in Great Britain, according to the Financial Ombudsman Service, those between 25 and 34 years of age are far more likely to use payday loans and issue complaints pertaining to payday lenders.

Why are millennials utilizing payday loans? Their bank accounts are overdrawn, their credit cards are maxed out, their expenses are getting out of control, student debt is immense and the cost of living remains high. Simply put: payday loans serve as their final pecuniary resort.

“They have already maxed out everything else and so they’re going to behavior that’s deemed even riskier,” said Shannon Schuyler, PwC’s corporate responsibility leader, in a statement.
Many are warning that at around this time of the year, with the Christmas season approaching, you are going to see an uptick in the number of households, both young and old, taking out payday loans.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

Japan’s Core Inflation Drops to Lowest in Three Years

Nov
12

Osaka JapanEfforts by Japanese government to boost inflation are still not yielding the desired results as the country’s core inflation declined again, as shown in newly-released data.

New figures made available by the Ministry of Internal Affairs showed that underlying inflation slumped virtually to zero in September – the first time that has happened since 2013. The “core-core” consumer price index (CPI) remained unchanged last month from a year ago.

Reading from the core CPI, which excludes food prices and volatile energy, indicates the extent to which stagnant prices have pervaded an economy that has somewhat become accustomed to deflation.

Headline inflation remained unchanged with a 0.5 percent on-year decline. Consumer spending, excluding housing, fell 1.1 percent without price adjustment and 0.6 percent in real terms.

The unemployment situation in the country is improving, with wages also growing. However, consumers do not seem willing to spend more as their incomes increases.

“Japan’s labor market continues to tighten and fuel faster wage growth,” Bill Adams, a PNC Financial senior international economist, said. “However, Japanese households are not spending their increased income.”

Japan’s unemployment rate dropped to 3.0 percent, according to the latest figures, falling slightly by 0.1 percentage points. The job openings-to-applicants ratio also improved to 1.38, the highest level in more than 25 years.

Adams said the Bank of Japan (BOJ) will feel its monetary stimulus justified by the latest data. He stated that an improving labor market will produce “inflationary pressures to raise CPI inflation to the Bank of Japan’s 2 percent target.”

The BOJ, which has been trying for years to achieve an inflation target of 2 percent, considers it vital to increase consumer expectations of future inflation. This it believes would cause employees to demand higher wages, with this driving up consumption and boosting the economy.

The newly-released data indicated onset of moderation in energy prices decline. Prices fell by 8.4 percent year-on-year in September, compared to 10.2 percent in the month before.

Investors are beginning to see some of the highest inflation levels in years ahead in many countries, except in Japan. Bloomberg reports five-year inflation swaps have stuck below 0.3 percent in the country, while equivalents in U.S and Germany have risen by higher percentages.

After more than three years at the helm, BOJ Governor Haruhiko Kuroda has not been able to change the deflationary mindset of the Japanese public. He has given slumping oil prices as a reason for his inability to steer a turnaround, but analysts have often criticized his choice of policies as being contradictory to set goals.

Japan’s central bank last month moved to boost confidence on future price increases by capping 10-year bond yields at zero. It also assured that inflation in the economy would overshoot the 2 percent target.

However, the yen has further weakened since that announcement, dropping below ¥105 on Friday.

It is unlikely that the new figures will cause a drastic shift from what the BOJ announced in September. The bank expects a rebound in the prices of commodities and a stable domestic currency to drive up inflation in 2017.

Facebooktwittergoogle_plusredditpinterestlinkedinmail

General Electric in Partnership Talks with Baker Hughes

Nov
11

General Electric

Industrial equipment giant General Electric Co. is reportedly engaged in ongoing discussions with major oilfield services provider Baker Hughes Inc. on a possible partnership deal that would help cut costs and enhance competitiveness.

People with knowledge of the talks told the Wall Street Journal that GE wants a merger of its oil-and-gas business with Baker Hughes.

The business newspaper had earlier reported that the industrial equipment maker was looking to buy the oilfield services company.

A GE spokeswoman, however, said that options under consideration in the ongoing discussions do not include a complete takeover.

“We are in discussion with Baker Hughes on potential partnerships,” spokeswoman Deirdre Latour said. “While nothing is concluded, none of these options include an outright purchase.”

Baker Hughes shares surged as high as 19 percent after-hours in New York on Thursday, following the report of the talks by the WSJ, which predicted a deal upward of $20 billion.

More oilfield contractors have been considering the option of partnerships with a view to saving costs. As a result of the downturn, oil exploration companies have requested service providers and gear makers for assistance in improving the efficiency of their activities.

Baker Hughes, one of the world’s largest energy companies, facilitates the activities of energy producers in finding and extracting deposits of oil and gas. It sells and rent tools and equipment to these companies, while also helping to supply labor and erect worker camps in drilling fields.

GE may reportedly consider the option of creating a new publicly-traded company from the merger, if successful. The deal would help reduce the direct involvement of the industrial equipment maker in an under-performing energy industry.

Houston-based Baker Hughes reached a $35 billion deal for a takeover by rival Halliburton Co. in 2014. But that deal was quashed by the Department of Justice earlier this year.

Sources said GE had been approached by the oilfield contractors to buy some Baker Hughes assets worth more than $7 billion in a bid to get the deal approved by regulators.

Since 2007, GE has spent more than $14 billion on acquisitions to expand its oil and gas business. The division has grown to become the jet engine maker’s fourth-largest.

A successful merger would rank among the biggest transactions to date by GE CEO Jeff Immelt. The partnership would also be able to compete more favorably with world’s No. 1 oilfield service provider Schlumberger Ltd., which only recently acquired equipment maker Cameron International.

The two-year downturn has hit the oilfield services and equipment sectors very hard. They have contributed the most to the over 350,000 job cuts across the world, according to Bloomberg. About 100 or more oilfield services company are believed to have gone bankrupt in North America since last year.

The proposed partnership would also enable GE keep apart a business that has been weighing down results in recent years. The oil and gas division experienced a 25 percent slump in sales during the third quarter.

Facebooktwittergoogle_plusredditpinterestlinkedinmail