Sunday 23rd November 2014
NEWS TICKER – FRIDAY NOVEMBER 21ST 2014: The director of the National Security Agency, Navy Admiral Michael Rogers, says he expects to see adversaries launch a cyber-attack in the next few years aimed at severely damaging America's critical infrastructure. "I fully expect that during my time as commander, we're going to be tasked to help defend critical infrastructure within the United States because it is under attack by some foreign nation or some individual or group," Rogers told the House Select Committee on Intelligence this morning (EST). Rogers, who also serves as commander of the US Cyber Command, says the government is better prepared to defend against those attacks than it was two years ago.On November 24th, the Federal Reserve will conduct a fixed-rate offering of term deposits through its Term Deposit Facility (TDF) that will incorporate an early withdrawal feature. This feature will allow depository institutions to obtain a return of funds prior to the maturity date subject to an early withdrawal penalty. The Federal Reserve will offer eight-day term deposits with an interest rate of 0.29000% and a maximum tender amount of $20,000,000,000. The penalty for early withdrawal is 0.75%, the minimum tender per institution is $20,000,000,000 - The Straits Times Index (STI) ended +29.72 points higher or +0.90% to 3345.32, taking the year-to-date performance to +5.70%. The FTSE ST Mid Cap Index gained +0.64% while the FTSE ST Small Cap Index gained +0.83%. The top active stocks were SingTel (+0.51%), UOB (+1.37%), DBS (+1.64%), Keppel Corp (+0.22%) and OCBC Bank (+1.16%). The outperforming sectors today were represented by the FTSE ST Basic Materials Index (+1.70%). The two biggest stocks of the FTSE ST Basic Materials Index are Midas Holdings (+1.72%) and Geo Energy Resources (+3.02%). The underperforming sector was the FTSE ST Technology Index, which gained +0.16% with Silverlake Axis’s share price gaining 0.41% and STATS ChipPAC’s share price unchanged. The three most active Exchange Traded Funds (ETFs) by value were the IS MSCI India (+1.70%), SPDR Gold Shares (+0.34%), DBXT MSCI Singapore IM ETF (unchanged). The most active Real Estate Investment Trusts (REITs) by value were Suntec REIT (unchanged), Ascendas REIT (unchanged), CapitaCom Trust (+0.89%) - In an interview with US online service Careers Info-Security News Greg Shannon, chief scientist at the CERT Division of Carnegie Mellon University's Software Engineering Institute says that to defeat cyber-adversaries, cybersecurity professionals should adopt a contrarian attitude, says. "Having that contrarian point of view allows you to get into the mindset of the adversary," Shannon says in an interview with Information Security Media Group. "How would this technology work if it did something the designer of it didn't think of?" he asks. "Certainly, that's the way the adversary is thinking, coming up with new attacks, new threats. They're looking at an app, a piece of software or some websites, [and they think] 'What can I do here that the designer didn't think of? Is there a way to get information through channels, through tricks that weren't anticipated? Is there some frailty of humans that I can exploit to get information out of them that they wouldn't normally give me?'" – Raiffeisen Bank International warned in an analyst conference call yesterday that profits in its Russian business would be challenged in Q4 versus Q3. The bank’s Chief Financial Officer Martin Gruell said higher risk provisioning and increased operating expenses could cut profits in its single most profitable market. "I would expect the fourth quarter to be a bit lower than the third quarter," he said. He believes the worst of the rouble's devaluation is over, but explained that the impact on the group’s capital from the dip in the ruble, could push RBI's core capital below 10% of risk-weighted assets by the end of this year - The performance of the Dutch residential mortgage-backed securities (RMBS) market remained stable during the three-month period ended September 2014, according to the latest indices published by Moody's Investors Service. The 60+ day delinquencies of Dutch RMBS, including Dutch mortgage loans benefitting from a Nationale Hypotheek Garantie, decreased to 0.95% in September 2014 from 0.98% in June 2014. At the same time, the 90+ day delinquencies decreased to 0.72% during the three-month period compared with 0.75% in June 2014. Cumulative defaults continued to increase to 0.54% of the original balance, plus additions (in the case of Master Issuers) and replenishments in September 2014, compared with 0.47% in June 2014, says the ratings agency. Cumulative losses slightly increased to 0.11% in September 2014 from 0.10% in June 2014 – According to a Clearstream client bulletin on November 18th, the US Internal Revenue Service and the US Treasury published an amendment to the current temporary regulations (TD9657) regarding FATCA. The amendment impacts Foreign Financial Institutions (FFIs) who have entered into an agreement with the IRS to become a participating FFI. It amends the determination date and timing for reporting with respect to the 2014 calendar year.

France needs supply-side policies to stimulate growth

Tuesday, 14 February 2012 Written by 
France needs supply-side policies to stimulate growth France’s ailing economy urgently requires stimulation – and this must come from supply-side policies. Previously buoyed by borrowing, the strength of real estate and an increase in fiscal deficits, France is now suffering from significant economic weaknesses that can only be overcome by a stimulation of supply via institutional, tax and labour market reforms. http://www.ftseglobalmarkets.com/

France’s ailing economy urgently requires stimulation – and this must come from supply-side policies. Previously buoyed by borrowing, the strength of real estate and an increase in fiscal deficits, France is now suffering from significant economic weaknesses that can only be overcome by a stimulation of supply via institutional, tax and labour market reforms.

 

The French economy is experiencing a decline in investment, an inability to rebuild exports, continuing market share losses and a rapid rise in unemployment. Although previously bolstered by an increase in private sector indebtedness, growth in residential construction (until 2008), and a temporary increase in fiscal deficits, economic growth has fallen to virtually zero as of the second quarter of 2011.



However, unlike similar situations in Spain and the UK, France’s underperformance is due to a deterioration of supply rather than a decline in demand. Certainly, France’s weak economy cannot be blamed on a rapid correction in the fiscal deficit, nor to a decline in real wages. In fact, there has been a worsening of supply-side conditions since the late 1990s, highlighted by a decline in profitability, the tightening of profit margins (particularly in the industrial sector) and the distortion of income sharing in favour of wages and to the detriment of profits, itself the equivalent to an economy-wide fall in profit margins.

The result is a country where companies are hampered by poor levels of investment. Indeed, the economy has become stuck in a mid-market product range, as portrayed by the sharp drop in French exports caused by an appreciation in the euro. Furthermore, France is exhibiting advanced deindustrialisation (in the past decade both manufacturing employment and manufacturing volume as a proportion of GDP have steadily decreased), weak growth of companies (limiting the number of companies big enough to export) and a high proportion of small and medium-sized enterprises (SME) that are prematurely sold to large groups. 

Reforms to restore the economy

Supply-side reforms are urgently required: in particular, tax reform to reduce companies’ welfare contributions, labour market negotiations to take into account both wages and employment, and institutional reforms to encourage the growth of innovative SMEs.

Firstly, France must reduce welfare contributions, especially those paid by companies. It is well known that welfare contributions negatively affect employment. Therefore to boost the supply of goods, and the demand for labour, there needs to be a reduction in government expenditure on wages and welfare benefits, or (as happened in Germany and the UK in 2007 and 2011 respectively) an increase in VAT.

Secondly, the country’s labour market lacks a corrective force in periods of rising unemployment. Current pay talks are purely wage-based and do not take into account the need to reduce unemployment and create new jobs. The result is that increasing unemployment does not have a significant impact on wages and therefore unemployment levels can remain high for long periods without reducing wages.

Therefore the government needs to ensure that pay talks involve both wages and jobs, in order to create a trade-off between wage increases and job creation. Certainly, the close link between unemployment and wage increases can be seen in Germany, Spain, Italy and the UK – a labour market scenario that France must replicate.

Finally, institutional reforms are needed to boost SME growth. France’s already weak export levels are compounded by the low proportion of companies big enough to export their goods. In order to stimulate growth among SMEs, France should create a Small Business Act and Small Business Administration to improve relationships between large groups and their subcontractors, simplify administrative paperwork and improve cooperation between companies and the education system.

Going forward

In the short term, these reforms (government spending cuts, a VAT hike, reduction in wages in exchange for additional jobs, etc.) would inevitably lead to a fall in demand. But the current view – that the solution to the economy’s woes lies in stimulating demand – must be abandoned in favour of supply-side policies if a recovery is to be achieved. 

The acute question remains in play: Is there a political party ready to carry out this programme after the presidential elections?

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

Website: cib.natixis.com/research/economic.aspx

Related News

Related Articles

Related Videos

Tweets by @DataLend

DataLend is a global securities finance market data provider covering 42,000+ unique securities globally with a total on-loan value of more than $1.8 trillion.

What do our tweets mean? See: http://bit.ly/18YlGjP