Countries & Regions Archives - Page 153 of 373

July 18, 2014

MH17 is the third plane this week shot down over Ukraine under mysterious circumstances – Vox

From Max Fisher:

…at first, people were wondering if rebels even had the capability to shoot down a high-flying commercial airliner like MH17. But there was another incident just on Monday, July 14, that did not get very much attention at the time. That day, over eastern Ukraine, an Antonov AN-26 Ukrainian military transport plane was hit by a missile while flying over eastern Ukraine — at 21,000 feet altitude. That’s far beyond the range of a shoulder-fired system like the MANPADS.

July 17, 2014

Malaysia Airlines MH17 crash: Deleted posts suggest Ukraine rebels downed jet in error

From The Straits Times:

…a message on the official Twitter account of the Donetsk People’s Republic had announced hours earlier that insurgents had seized a series of Russian-made Buk systems capable of soaring to that height.

“@dnrpress: self-propelled Buk surface-to-air missile systems have been seized by the DNR from Ukrainian surface-to-air missile regiment A1402,” said the post.

That tweet was later deleted as well.

July 17, 2014

What We Know So Far About the Passenger Jet Shot Down in Ukraine

From Elias Groll & Reid Standish:

Update: 1:10 p.m.Prior to the Malaysian Airlines jet’s shoot down, pro-Russian separatist leader Igor Strelkov posted on the Russian social networking site, VKontakte, claiming responsibility for shooting down a Ukrainian AN-26 transport plane. However, after news emerged of the downed Malaysian Airlines plane, Strelkov’s page appears to have been scrubbed of the post.Strelkov’s page claimed responsibility for taking down a Ukrainian jet and posted and accompanying video that shows smoke rising from what is now believed to be the crash site of the passenger jet. Below is a screengrab of Strelkov’s VKonkakte page that includes the post claiming responsibility for the downed transport plane. That post now appears to have been removed. Donetsk separatist boss Strelkov, Kremlin’s proxy in war, says he ordered shootdown thinking plane was Ukrainian pic.twitter.com/uaWKVlsA7q — Strobe Talbott @strobetalbott July 17, 2014 After reports emerged that a passenger jet had been shot down, Strelkov said that his forces were not responsible and that they lacked the capability to shoot down a plane flying at that altitude. The plane was reportedly flying at an altitude of about 33,000 feet.Meanwhile, additional images are emerging of the crash site, including the horrifying image below that was carried by Russian television:

July 17, 2014

ASX encounters resistance

The ASX 200 gapped up at today’s open, but encountered strong selling at recent highs of 5550 — evidenced by large volume on the hourly chart. The index retreated, but respect of support at 5525/5530 and the rising trendline indicates buyers remain in control. Breakout above 5550 would signal another primary advance, with a long-term target of 5950*.

ASX 200

* Target calculation: 5450 + ( 5450 – 5050 ) = 5950

July 16, 2014

Australia: UBS eyes $23b capital hit to big banks

Chris Joye at AFR reports on a recent study by UBS banking analysts Jonathon Mott and Adam Lee. The two believe that David Murray’s financial system inquiry is likely to recommend an increase of 2 to 3% in major banks tier 1 capital ratios.

Based on an extra 3 per cent capital buffer for too-big-to-fail banks, UBS finds that the major banks would have to “increase common equity tier one capital by circa $23 billion above current forecasts by the 2016 financial year end”.

…This automatically lowers the major banks’ average return on equity at the end of the 2016 financial year from 15.4 per cent to 14.3 per cent, or by about 116 basis points across the sector. Commonwealth Bank and Westpac come off best according to the analysis, with ANZ and National Australia Bank hit much harder.

Readers should bear in mind that capital ratios are calculated on risk-weighted assets and not all banks employ the same risk-weightings, with CBA more highly leveraged than ANZ. As I pointed out earlier this week, regulators need to monitor both risk-weighted capital ratios and un-weighted leverage ratios to prevent abuse of the system.

Bear in mind, also, that a fall in return on equity does not necessarily mean shareholders will be worse off. Strengthening bank balance sheets will lower their relative risk, improve their cost of funding, and enhance valuations.

July 16, 2014

Netherlands Held Liable for 300 Deaths in Srebrenica Massacre – NYTimes.com

From DAN BILEFSKY and MARLISE SIMONS at the New York Times:

The Dutch Supreme Court, which was upholding a 2011 decision by an appellate court, said that even though United Nations commanders were in charge of the peace mission at Srebrenica, in the days after the Bosnian Serb takeover, Dutch authorities had “effective control” over the troops and therefore shared liability.

Srecko Latal, a political analyst who until recently worked with the nonprofit International Crisis Group in Sarajevo, Bosnia, said by phone that the verdict was important for showing that peacekeepers had both a moral and a legal responsibility to protect civilians….

The Srebrenica tragedy highlights two important issues:

Why are lightly armed UN peace-keeping forces being sent into conflict areas where they are incapable of offering effective protection from heavily-armed protagonists? You don’t have a strong negotiating position when your opponent has tanks and artillery.
Who is responsible if troops under UN command obey orders?

July 16, 2014

Banks try scare tactics to avoid calls for more capital

ANZ chief executive Mike Smith is the latest banker to warn that the push to increase bank capital ratios will reduce access to bank finance. The AFR reports Smith as saying:

It is not just about banks, it is about the real economy – about corporations, business and individuals… It is one thing for a bank to complain about regulation but it is another thing for a corporation to say we are not getting finance because of this regulation that is being imposed on the banks.

Methinks bank resistance to increased capital requirements is more about protecting bonuses than about protecting shareholders or the broad economy. Shareholders would benefit from lower funding costs and improved stock ratings associated with a stronger balance sheet, while Bank of England’s Andrew Bailey had this to say about the impact of stronger capital ratios on bank lending:

I do however accept that there remains a perception in some quarters that higher capital standards are bad for lending and thus for a sustained economic recovery…… Looking at the broader picture, the post-crisis adjustment of the capital adequacy standard is a welcome and necessary correction of the excessively lax underwriting and pricing of risk which caused the build up of fragility in the banking system and led to the crisis. I do not however accept the view that raising capital standards damages lending. There are few, if any, banks that have been weakened as a result of raising capital.

Analysis by the Bank for International Settlements indicates that in the post crisis period banks with higher capital ratios have experienced higher asset and loan growth. Other work by the BIS also shows a positive relationship between bank capitalisation and lending growth, and that the impact of higher capital levels on lending may be especially significant during a stress period. IMF analysis indicates that banks with stronger core capital are less likely to reduce certain types of lending when impacted by an adverse funding shock. And our own analysis indicates that banks with larger capital buffers tend to reduce lending less when faced with an increase in capital requirements. These banks are less likely to cut lending aggressively in response to a shock. These empirical results are intuitive and accord with our supervisory experience, namely that a weakly capitalised bank is not in a position to expand its lending. Higher quality capital and larger capital buffers are critical to bank resilience – delivering a more stable system both through lower sensitivity of lending behaviour to shocks and reducing the probability of failure and with it the risk of dramatic shifts in lending behaviour.

The BOE and BIS tell us that higher capital ratios will improve bank lending, yet Mr Smith is trying to scare regulators with threats that it will have the opposite effect.

And at ANZ CEO Mike Smith Rebuffs Murray Inquiry Call For More Bank Capital | Business Insider.

July 15, 2014March 22, 2021

Ray Dalio: The Economic Machine and Beautiful Deleveraging

Ray Dalio, founder of Bridgewater Associates, released a 30 minute video in 2013, explaining his template of the economy and how central banks and government should manage a deleveraging like the Great Recession and its after-effects.

Ray proposes three simple rules to avoid future crises:

Don’t let debt grow faster than income (GDP) otherwise it will eventually crush you;
Don’t let income grow faster than productivity otherwise you will become uncompetitive in international markets; and
Do all that you can to raise productivity because in the long run that’s what matters most.

What is productivity and how do we measure it?

Productivity is the result of hard work and innovation, both of these factors will increase the level of output (GDP) per unit of input.

We measure productivity by comparing GDP to units of input, either:

the population of a country;
the number of hours worked; or
the number of people employed.

Index

Each will give a different perspective, but there are a few general rules:

countries with high technology and innovation (e.g. Germany or USA) show high productivity;
as do resource-rich countries with big extraction industries (like Norway and Australia); and
countries with low tax regimes (Singapore and Ireland) which attract transient income.

July 15, 2014

ASX 200 faces resistance

The ASX 200 is testing resistance at 5540/5560. Oscillation of 21-day Twiggs Money Flow around zero continues to indicate hesitancy. Breakout above 5560 is unlikely, but would offer a target of 5700*. Reversal below 5450 would mean another test of support at 5370.

ASX 200

* Target calculation: 5550 + ( 5550 – 5400 ) = 5700

ASX 200 VIX below 10, however, continues to indicate a bull market.

ASX 200

July 15, 2014

China dousing the flames with gasoline

The PBOC is dousing the flames with gasoline, adding further credit to prevent a slow-down. The longer this goes on, the more precarious their situation will become.

China June credit shatters forecast – 1.9 trillion CNY Vs 1.4 trillion CNY in May. Growth now Beijing's top priority. pic.twitter.com/ue2WXL65AH

— Tom Orlik (@TomOrlik) July 15, 2014

Shanghai Composite Index lifted above 2060/2065, indicating continuation of the rally to 2090. Rising 21-day Twiggs Money Flow troughs above zero signal strong medium-term buying pressure. Breakout above 2090/2100 would suggest another test of 2150. Failure of primary support at 1990/2000 is unlikely, but would warn of a decline to 1850*.

Shanghai Composite Index

* Target calculation: 2000 – ( 2150 – 2000 ) = 1850

India’s Sensex retraced to test support at 25000 after reaching its target of 26000. Respect would signal continuation of the advance, but 21-day Twiggs Money Flow below zero warns of selling pressure. Breach of support would warn of a correction to the primary trendline, around 23000.

Sensex

* Target calculation: 21000 + ( 21000 – 16000 ) = 26000

The weekly chart of Japan’s Nikkei 225 (21-day Twiggs Money Flow) shows the index consolidating below 15500. 13-Week Twiggs Money Flow holding above zero signals long-term buying pressure. Breakout above 15500 would test the December 2013 high at 16300. Reversal below 15000 is less likely, but would warn of another test of primary support at 14000.

Nikkei 225

* Target calculation: 15000 + ( 15000 – 14000 ) = 16000