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Markets, IMF send Brazil clear message: Reform your economy - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

American Enterprise Institute - 2 hours 38 min ago

One has to hope that Brazil’s presidential candidates in that country’s October elections are listening to the clear signals coming first from the markets and now from the International Monetary Fund about Brazil’s troubling economic prospects.

If not, we should brace ourselves for a major economic crisis in the world’s eighth-largest economy that could send ripples through the global economy.

Over the past few years, in a global environment of very easy money, markets chose to turn a blind eye to Brazil’s shaky public finances and to its poor economic growth record. They did so as investors stretched for yield.

However, this picture seems to have changed abruptly since the start of this year. It did so as U.S. Treasury yields approached 3 percent and as the U.S. dollar began to appreciate in response to clear indications that the Federal Reserve was intent on normalizing U.S. monetary policy and reducing the size of its bloated balance sheet.

With attractive returns now on offer on low-risk U.S. financial assets and with a strengthening U.S. dollar, investors have become more discriminating in their investments, particularly toward the emerging market economies.

The capital that had earlier flooded those latter economies in the easy global money times also started to come back to the U.S. As a result, along with the currencies of Argentina, South Africa and Turkey, the Brazilian real has been pummeled by almost 20 percent since the start of the year. At the same time, its government bonds and its equities have taken a beating.

If Brazilian policymakers might be excused for not fully grasping the clear signal that the markets are now sending them about the need for economic and public financial reform, they have no excuse for not understanding the explicit message about the urgent need for economic reform coming out of the IMF.

At the conclusion of its recent annual economic review, the IMF noted that the Brazilian economy has been underperforming relative to its potential, its public debt is high and increasing, and, more importantly, medium-term growth prospects remain uninspiring, absent further reforms.

The IMF went on to warn that especially against the backdrop of tightening global financial conditions, placing Brazil on a path of strong, balanced and durable growth would require a committed pursuit of fiscal consolidation and ambitious structural economic reforms.

A well-founded concern of both the markets and the IMF is the explosive path on which Brazil’s public debt now seems to be set. Since 2014, Brazil’s public debt as a share of GDP has jumped some 20 percentage points to its present level of around 75 percent.

More troubling yet, on present policies and on rather optimistic assumption about future economic growth, the IMF is projecting that over the next few years, Brazil’s public debt will increase further to 90 percent of GDP. That would take its public debt level well beyond that which in the past has got the country into deep economic and financial trouble.

Against the backdrop of the prospective continued tightening in the global liquidity cycle, one has to be concerned about troubling signs that Brazil might not have the political will to address its poor public finances in a timely manner.

One such sign was that following the recent crippling truckers’ strike against high fuel prices, the current Brazilian government was forced to increase fuel subsidies and to soften its economic policy stance.

More disturbing signs of the lack of political will are the strong showing of populist candidates in the polls for October’s presidential election and the fact that even mainstream candidates are shying away from a discussion of what the country needs to do to turn around its public finances and to jumpstart its economy.

Hopefully, in their setting of monetary and trade policies, U.S. policymakers are taking note of the dangerous path on which the Brazilian economy now finds itself as well as of how Brazil can impact the U.S. and global economies. Unlike Argentina and Turkey, which are already enmeshed in major economic crises, Brazil is South America’s largest economy and is a highly indebted country of systemic importance.

One would think that the last thing that Brazil’s already fragile economy now needs is a further intensification of U.S. import protection or a more rapid increase in U.S. interest rates.

One would also think that at a time that the Chinese economy is slowing and Italian developments are raising the prospect of a return of the U.S. sovereign debt crisis, the last thing that the U.S. economy needs is a full-blown Brazilian economic and financial crisis.

Rapidly Growing Healthcare Solution Keeps Government Out of Medical Costs

Breitbart News - 2 hours 38 min ago
The following post is sponsored by Liberty HealthShare. The story of one of today’s most rapidly growing healthcare solutions dates back to the early 1980’s when an Ohio pastor was involved in a tragic auto accident. Left unable to afford the vast amount of medical bills that resulted from the accident, the pastor wasn’t sure how he was going to pay his bills. Fortunately, word quickly got out to those who were familiar with pastor’s work with alcoholics and drug addicts. Within 45 days, all of the pastor’s medical bills were paid in full thanks to the compassion and caring of his fellow Christians. The Christian principle to ‘bear one another’s burdens’ as stated in Galatians 6:2 led this pastor to starting the first modern healthcare sharing ministry of its kind. For many people, when they are introduced to something different from what is familiar, there is often a sense of uneasiness and apprehension. These feelings of uneasiness and apprehension are feelings that are commonplace for consumers when it comes to their healthcare. While, in general, many of us are more comfortable keeping things the way they are and the way in which we have become accustomed, most of us

WashPost 'Humorist' (and Ten Friends) Joke About How Chefs Should Mock Sarah Sanders

NewsBusters - 3 hours 4 min ago
<p><em>Washington Post Magazine</em> humorist Gene Weingarten is only writing one column a week, and now he's out-sourcing it to ten of his liberal friends. Together, they produced the kind of "humor" that comes from people who are still sore that Hillary Clinton isn't president. The concept was this: If the Red Hen restaurant did not kick out Trump press secretary Sarah Huckabee Sanders, what should they have done to express their "antipathy to the Trump administration"? One suggested they kidnap their kids.</p>

Donald Trump: FISA Warrant to Spy on Campaign 'a Disgrace to America'

Breitbart News - 3 hours 38 min ago
President Donald Trump highlighted Monday the revelation of the FISA warrant used to spy on one of his foreign policy advisers Carter Page.

'Rick and Morty' Creator Dan Harmon Deletes Twitter Account After Fake Baby Rape Video Goes Viral

Breitbart News - 5 hours 4 min ago
'Rick and Morty' creator Dan Harmon deleted his Twitter account this weekend after a fake baby rape video featuring him surfaced and went viral on social media.

Five reasons why Europe fines Google and the US tech sector - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

American Enterprise Institute - 5 hours 32 min ago

Since June of last year, the European Union (EU) has grabbed $7.7 billion from Alphabet Inc. (Google’s parent company): a record-setting $5 billion fine last week, which topped the $2.7 billion record-setting fine slapped on Alphabet in June 2017.


What were Alphabet’s sins? The $5 billion fine was for creating the very successful Android operating system, which the company gives away to device manufacturers in exchange for the inclusion of profitable Google apps and services on devices. The $2.7 billion fine was for developing a great search engine and giving it away for free in exchange for users accepting the company giving priority placement to some of its profitable services.

There is a pattern here: First, US tech startups take large risks developing more new products than anyone bothers to count, of which only a small number succeed. Next, some of the successful companies expand into Europe using the same business strategy they use everywhere else: give services away for free in exchange for customers accepting marketing of profitable services. Lastly, the EU objects to European customers’ choosing to use these services and fines the US companies.

Why does this pattern exist? There are at least five reasons why the EU imposes record-breaking fines on US tech companies.

Reason 1: It’s good politics

Geopolitics matters. As Senator Orin Hatch (R-UT) tweeted: “The EU has a history of engaging in regulatory, tax & competition actions & proposals that disproportionately hit U.S. tech companies. This decision calls into question whether these actions are anything more than a series of discriminatory revenue grabs.”

There is evidence supporting the senator’s claim. Dating as far back as the WorldCom-MCI merger and the proposed GE-Honeywell merger, the EU went after US companies at least in part because they might outperform European companies.

But if the EU’s plan is to benefit European tech companies, it isn’t working out. As my AEI colleague James Pethokoukis showed last year, out of the 20 global leaders in tech, none are from Europe.

Reason 2: EU competition policies attack business models that make companies great

Europe’s competition policy places restrictions on what it defines as “dominant” companies. What does it take to be declared dominant? A market share greater than 40 percent held over a number of years, which, oddly enough, is also the definition of a successful company with large numbers of happy customers. And of course, there can be a bit of magic here since the antitrust authorities get to define the term “market,” which lacks a certain degree of coherence in tech. In the immediate case, the EU concluded that Apple’s app store and iOS are no competition for Android. That must be a shock to happy Apple customers.

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In Europe, once a company becomes successful, it has to stop some of the practices that customers like. This harms customers, but the EU is more concerned that standout companies distort competition by, well, standing out. In the immediate case, the EU considered it a problem that large number of Europeans bought Android phones rather than iPhones or Windows-based phones. Presumably Alphabet should have lowered the value of its offering once it proved popular.

Reason 3: The EU doesn’t like network effects

Google’s search engine is a two-sided market in that the users of search (one side of the market) attract advertisers (the second side), including Google. Google pays for its search engine from the money it makes from selling advertising or its own services that users find through the search engine. The more money Google makes from such advertising and services, the more it is willing to spend on making its search engine even more attractive to users. This benefits users, but the EU objects. An objection to network effects was central to the EU’s opposition to the Worldcom-MCI merger.

Reason 4: Bundled services also seem to bother the EU

Bundled services can be a win-win for customers and companies. Sometimes the bundle is more affordable for customers because bundling can increase sales, which allows a company to spread fixed costs over more customers. Other times the bundle prompts customers to use services that they value but wouldn’t otherwise choose if they had to pay separate prices.

The EU views bundling as a problem if a company is successful with some element of a bundle. This appears to be part of the problem that Google encountered in the most recent fine. Google gave away a lot of Android operating systems but did so bundled with profitable apps and other services, the revenues from which covered costs for the operating system. The potential value of a bundle was a central EU concern with the proposed GE-Honeywell merger.

Reason 5: The EU doesn’t like the messiness of tech innovation

Success in tech requires a willingness to destroy things by making them obsolete. According to a study by the EU, the majority of Europeans don’t like this idea very much, preferring to work in established institutions. Over half of Americans prefer to strike out on their own.

So it’s no surprise that European authorities would object to American entrepreneurs making headway in Europe by disrupting the established order.

What can be done? The community of antitrust professionals and academics should address this head-on by filling gaps in how antitrust should be applied in situations with network effects, clearly distinguish between business success and market power, and investigate the unique features of digital markets. This will pressure European professionals to modernize their approaches. Policy makers should also engage to ensure that antitrust enforcement is about customer harm and not used for other purposes.

(Disclosure statement: Mark Jamison provided consulting for Google in 2012 regarding whether Google should be considered a public utility.)

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Colbert's Cartoon Bill Clinton Admits: 'I Should Be in Jail'

NewsBusters - 9 hours 49 min ago
<p>With gags like President Donald Trump being beckoned to the situation room with promises of doughnut crumbs to Vladimir Putin's declaration that the Helsinki Summit was "a vibrant conversation of me telling him exactly what to say and do," Stephen Colbert's animated Showtime series <em>Our Cartoon President</em>, is a sophomoric, ham-handed attempt to make fun of Trump, his family and administration. But the episode "First Family" might take its biggest shot at former President Bill Clinton for his "criminally poor impulse control."</p>

Tech CEO: China Real Cyber Threat, Not Russia

Breitbart News - 9 hours 54 min ago
Americans are in a war with China -- just not one involving bombs, Jim Phillips, Chairman and CEO of NanoMech said on Friday evening's edition of SiriusXM's Breitbart News Tonight with co-hosts Rebecca Mansour and Joel Pollak. 

Gunman Opens Fire in Toronto -- One Dead, 13 Wounded

Breitbart News - 10 hours 3 min ago
One person is dead and 13 others are wounded after a gunman opened fire in Germantown in Toronto, Canada, Sunday night, reports say.

Tim Kaine to Corey Stewart at First Debate: 'We Are a Nation of Immigrants'

Breitbart News - 10 hours 32 min ago
President Donald Trump and his administration's policies loomed large over Saturday's heated U.S. Senate debate in Virginia, as Democratic incumbent Sen. Tim Kaine faced off with avowedly pro-Trump Republican challenger Corey Stewart.

'Preacher' Blasphemes with Gluttonous, Obese Version of Pope

NewsBusters - 10 hours 51 min ago
<p>AMC’s <em>Preacher </em>is no stranger to controversy obviously, but the worst of the worst usually comes from the original graphic novel. The fact that the show feels confident enough to bring it to screen says more about our society than anything I could type. The latest casualty this week is the Pope.</p>

More of the Same from Sacha Baron Cohen: Mocking Conservatives on 'Who is America?'

NewsBusters - 10 hours 58 min ago
<p>If there was ever any doubt about the intentions of Sacha Baron Cohen’s <em>Who is America?</em>, Sunday night’s episode settles it. Three out of the four segments in tonight’s episode of the Showtime series mocked conservatives while none mocked liberals.</p>

Donald Trump Threatens Retaliation to Iran's 'Demented Words of Violence'

Breitbart News - 11 hours 7 min ago
President Donald Trump responded to a threat from Iran's President Hassan Rouhani, issued on Sunday, vowing to make the country suffer consequences if threats continue.

AEI Political Report: Polls on Kavanaugh’s nomination, the Supreme Court, Roe v. Wade, and abortion - AEI - American Enterprise Institute: Freedom, Opportunity, Enterprise

American Enterprise Institute - 11 hours 30 min ago

Read the PDF

The July–August issue of AEI’s Political Report provides public opinion context for the hearings that will be held on Brett Kavanaugh’s nomination to the Supreme Court by looking at attitudes toward the Court and at views on Roe v. Wade and the legality of abortion.

In addition, we examine public views about democracy. Are Americans dissatisfied with democracy itself, or are they dissatisfied with the way our democratic government is performing?

The Supreme Court 

  • Support for Kavanaugh and past nominees: Data from several pollsters on past Supreme Court nominations show that initial support for confirmation usually outweighs opposition, although many people opt not to weigh in either way. Early polls about Brett Kavanaugh’s nomination show a slightly narrower division between support and opposition than there was in initial polls about recent past nominees (Gallup, Pew, Fox News, Huffington Post/YouGov).
  • Ideology of the Court and partisan approval: More people today think the current Supreme Court is too conservative (29 percent) than think it is too liberal (21 percent), a reversal from polls in 2009–16, although a plurality (44 percent) continue to say it is “just about right” (Gallup). Views of the Court have been divided by partisanship since Bush v. Gore. Approval of the Court rose among Republicans from 26 percent in September 2016 to 72 percent in July 2018, while it fell from 67 percent to 38 percent among Democrats over the same time period.
  • Confirmation factors: Pollsters have used different wording to understand what Americans think senators should consider in voting on a nominee. A majority of Americans in a recent Pew survey said Supreme Court nominees should be required to answer when senators ask them about issues such as abortion. At the same time, a recent Gallup poll found people are divided as to whether senators would be justified in voting against a qualified nominee if they disagree with the nominee’s stance on issues such as abortion, gun control, or affirmative action. A majority of registered voters in a recent Fox poll said it is unacceptable for a senator to base his or her vote on a nominee solely on the nominee’s position on abortion.

Roe v. Wade and abortion 

  • Roe: Most Americans do not want the Supreme Court to overturn Roe v. Wade. Three recent polls by Gallup, Fox News, and Kaiser Family Foundation all found that more than 6 in 10 said Roe should not be overturned.
  • Legality of abortion: Decades of polling has shown that pluralities to majorities think abortion should be legal in some circumstances or cases (Gallup, Pew). Most (60 percent in Gallup’s 2018 survey) say abortion should generally be legal during the first three months of pregnancy, but few (13 percent) say that it should during the last three months. In General Social Survey questions asked since 1972, majorities have consistently said it should be possible for a woman to obtain a legal abortion if her health is seriously endangered, if the pregnancy was a result of rape, or if there is a strong chance of a serious defect in the baby (NORC). Support for legal abortion “for any reason” is lower.
  • Deal breaker for voters? Surveys suggest people care about a candidate’s position on abortion, but most don’t see it as a deal breaker. Sixty-four percent of registered voters in a December 2017 Quinnipiac survey said they would still vote for a candidate with whom they did not agree on the issue of abortion. In a March 2018 Public Religion Research Institute poll, 18 percent of adults said they would only vote for a candidate who shares their views on abortion, a plurality (47 percent) said they would consider a candidate’s position on abortion as just one of many important factors, and 30 percent did not see abortion as a major issue.

Democracy’s discontents 

  • Americans view democracy positively but are deeply dissatisfied with the US democratic government’s current performance. For example, 86 percent told Pew pollsters in early 2017 they thought “a democratic system where representatives elected by citizens decide what becomes law” is a good way of governing this country, compared to 46 percent who said they were satisfied with the way democracy was working in our country.

To view past issues of AEI’s Political Report, visit our archive here.

Maxine Waters: Trump Is 'Putin's Apprentice'

Breitbart News - 11 hours 53 min ago
Sunday, Rep. Maxine Waters (D-CA) responded to President Donald Trump’s trip to Helsinki to meet with Russia President Vladimir Putin, accusing the former “Apprentice” star on MSNBC’s “AM Joy” of being Putin’s apprentice. “I’m not surprised about this president standing up for Putin,” Waters told host Joy Reid. “As a matter of fact, I think he is Putin’s apprentice. He’s been under his tutelage for a long time now, and he intends to get it done.” She continued, “[T]he American people are standing idly by. And the Republican Party should be ashamed that they are allowing this to happen. They have no guts, they have no courage, they are not standing up for America. I dare them to talk about how patriotic they are given what they’re allowing this president to do.” Follow Trent Baker on Twitter @MagnifiTrent

David Hogg Unleashes Tweetstorm on Americans for Walking Away from Democrats

Breitbart News - 12 hours 21 sec ago
Gun control advocate David Hogg unleashed a tweetstorm Sunday over the #WalkAway movement and the untold number of Americans that are walking away from the Democrats as part of it.

Seven Competitive GOP-Held House Seats in Florida, Only One 'Leans Democrat'

Breitbart News - 12 hours 40 min ago
Seven of the 86 Republican-held House seats across the country that are rated as "competitive" this midterm election are in Florida.

Exclusive– Georgia’s Brian Kemp Rallies Ahead in Governor Primary with Trump’s Complete Support

Breitbart News - 13 hours 38 min ago
Georgia Secretary of State Brian Kemp has pulled ahead of his opponent in the Republican gubernatorial primary election on Tuesday after President Donald Trump endorsed him last week.

WSJ/NBC Poll: Trump's Approval Climbs Despite Russia Hype

Breitbart News - 14 hours 17 min ago
President Donald Trump yielded a 45 percent approval rating in the latest joint Wall Street Journal/NBC News poll carried out between July 15th and 18th.

NYT Shows No Self-Awareness, Hits Pro-Trump Tabloid for 'Crossing...Line Into Politics'

NewsBusters - 14 hours 25 min ago
<p>The <em>New York Times</em> indulged in some self-owning irony on Sunday’s front page under the byline of Jim Rutenberg and Ben Protess. The subject was American Media Inc., the tabloid company that publishes the <em>National Enquirer</em>: "Federal authorities examining the work President Trump’s former lawyer did to squelch embarrassing stories before the 2016 election have come to believe that an important ally in that effort, the tabloid company American Media Inc.,<strong> </strong>at times acted more as a political supporter than as a news organization, according to people briefed on the investigation." The high irony of that sentence evidently escaped <em>The Times</em>.</p>


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