5 June 2019 FT — Articles to Read

5 June 2019


Question: What percentage of U.S. prisoners are held in privately owned prisons?


Powell puts Fed on standby for rate cuts with vow to fuel growth – Pg. 1

–          …signaled that the central bank stands ready to cut interest rates, saying it would “act as appropriate to sustain the expansion” amid the economic impact of escalating trade wars

–          Referring to tariffs, which have been raised on imports from China and Threatened on those from Mexico, he said the Fed would “act as appropriate to sustain the expansion, with a strong labour market and inflation near our symmetric 2% objective”

–          The US economy grew at an annualized rate of more than 3% in the first quarter, but is expected to have slowed in the second three months

–          Financial markets indicate it will be almost impossible for the Fed to resist cutting rates this year, with the most likely outcome being two quarter-point reductions by the end of December


Beijing warns citizens of harassment and gun crime in US – Pg. 2

–          China has warned its citizens of the risks of travelling to the US, where they face being “repeatedly harassed” by law enforcement agencies, in an escalation of tension between the two powers

–          The US and China are in the midst of an intensifying trade conflict that has spilled over into broader political problems.  Last month, the US in effect banned American suppliers from exporting to Huawei, the Chinese telecoms equipment company, and Beijing responded by announcing it would draw up a blacklist of US companies

–          The travel warnings came in the wake of a shooting in Virginia Beach in Friday in which 12 people were killed,…

–          On Monday, Beijing warned Chinese students and scholars that they face ever-higher obstacles in getting US visas, while also telling parents to carefully assess the risks of vising the US

–          Last year 3m Chinese nationals visited the US and spent $36.4bn, making China the US’s biggest source of travel exports and the fifth-biggest source of tourists,…


World Bank chief complains of deepening slowdown – Pg. 4

–          …downgraded its global growth forecasts to 2.6% for 2019, from a projection of 2.9% in January – the latest in a series of gloomy projections by international economic institutions

–          Mr Trump has also threatened to slap tariffs of 5% on Mexican goods starting next week, rising to 25% by October unless Mexico  did ore to contain illegal migration to the US

–          The biggest downgrades to the forecasts were for Europe and central Asia, which is expected to grow 1.6% this year, a 0.7% point drop in January.  It also cut its forecast for Sub-Saharan Africa to 2.9%, a 0.5% drop


French central banker seeks global role for euro – Pg. 4

–          A leading contender to head the European Central Bank has called for more action to increase the use of the euro in global transactions and challenge the dominance of the US dollar

–          After the euro was introduced in 1999, it became the world’s second most important currency

–          …since the 2008 financial crisis and the 2012 eurozone crisis its global use has declined and “remains limited in comparison with the dollar”

–          …vowed to turn the euro into a global reserve currency and said it was an “aberration” that the EU paid for more than 80% of its energy imports in US dollars, despite 2% of them coming from the US


Australia opts to cut interest rate to record low – Pg. 4

–          Australia’s central bank has cut its main interest rate for the first time in three years to a record low of 1.25% to stimulate a slowing economy affected by falling house prices and a slowdown in China, the country’s biggest trading partner

–          The Reserve Bank of Australia said it expected the 0.25% cut would help to reduce unemployment and boost subdued inflation

–          The RBA also warned about what it said were increasing risks to the global economy stemming from trade disputed, which were affecting investment decisions


Governments should offer new parents incentives to stay at home – Pg. 9

–          Paternity leave has benefits for individual families, companies and society at large.  Not only are fathers who take it more involved with their children, but paid paternal leave is associated with higher female employment, improved retention, lower gender pay gaps and less gender stereotyping at work

–          Several Nordic countries and Germany have enacted laws that provide extra paid leave when both partners take a turn at home

–          Now some big companies are starting to see equal leave as a recruit and retention tool

–          Until both sexes are given – and take – substantial parental leave, women will face discrimination from employers who see child rearing as a burden


Grenada pioneers bond payment relief for when disaster strikes – Pg. 19

–          In its largest debt restructuring, in 2015, Grenada inserted a clause that stipulated an immediate if temporary debt moratorium if the country was struck by another natural disaster

–          The move, endorsed by the influential “Paris Club” of governmental creditors, held out the promise of vital financial relief at times of stress

–          The idea is an intriguing gone for the Caribbean, which is populated by tiny statelets that are regularly buffeted by severe tropical storms and occasionally hit by hurricanes

–          The IMF said the average annual cost of weather-related damage was equal to 2.4% of the region’s GDP a year, about six times that of bigger countries

–          Barbados inserted a hurricane clause into its restructured domestic debt this year and was negotiating with creditors over an insertion of the clause into its external debt

–          Nearly one in 10 such disasters that hit small countries causes damage equivalent to more than 30% of GDP…

–          Hurricane clauses are less dramatic and some investors might be willing to accept them but probably only at the cost of higher interest payments, which countries may blanch at

–          This has become apparent in Barbados as international investors that hold its external bonds appear to have cooled on the idea of introducing hurricane clauses


Answer: 10%