MarketLine Blog

Posts about Government

Macron labor law reforms: Overdue changes to French labor laws are much needed victory for business

MarketLine

The envisioned reforms are wide-ranging and are easily the most ambitious set of labor market reforms to have made it this far intact. Previously, all efforts have floundered under the weight of popular protest. Although productivity remains healthy in the domestic economy, business growth has been stymied by bad regulation which deters job creation, especially for small businesses nearing the 50th employee threshold which makes the employer subject to an alarmingly complex and costly set of regulations. Bodies representing small and medium businesses are pleased with the outcome, hailing them… Read more

No longer too big to jail: Imprisoning heir to Samsung can create change in chaebol culture

MarketLine

Efforts to solve problems emanating from corporate governance and culture within massive chaebols have gained fresh impetus from the conviction of Lee Jae-yong for bribery in a corruption scandal which was responsible for the impeachment of President Park earlier this year. For significant change in culture to occur and for forces seeking change to stand a reasonable chance of success, Mr. Lee must remain in prison rather than be subject to the pardons previous prison sentences handed to powerful businessmen have ended in. Pushed by a sizeable chunk of public… Read more

Ezetap Quest to democratize India’s digital payments industry

MarketLine

India has recently been going through a digitalization of almost everything, and this revolution has now reached the traditional banking and finance sectors. As even large banks have realized that using time tested technology means always staying a generation behind, there is now much acceptance and demand in terms of implementing financial startup products and services in the country. Additionally, the recent and largest ever government demonetization caused a cash-crunch, hitting the remote, rural areas most, and left citizens with no choice but to go digital. With nearly 1 billion… Read more

US and China trade talks: Emphasis on steel and tariffs is misguided

MarketLine

The danger of current US policy towards Chinese steel is that damaging tariffs will be imposed. Many observers describe such a policy as the nuclear option because the ability of other countries to impose harmful tariffs on US goods will be just as strong. Troublingly, tariffs would do little to solve the actual problem of dumping on the international market. A policy with many similarities was attempted in 2002 but resulted in a public climb down by the then President Bush after severe job losses were incurred. Tariffs are not… Read more

Poland: Kaczynski close to demolishing all remaining democratic oversight in Poland

MarketLine

Kaczynski’s ruling PiS (Law & Justice) party has, since its election, been rapidly demolishing the process of democracy in Poland. The PiS party has crushed the power of the opposing parties and state institutions that had the ability to stand in its way. In July 2017, the party introduced a bill attacking the independence of the judiciary and despite street protests and chaotic and angry scenes in the house, and this bill has now passed. This bill will mean that judges will be in direct control of the justice minister,… Read more

Ambitious Trans-Iran Canal still waiting for construction to begin: “Competitor” to Suez Canal unlikely to see construction begin any time soon

MarketLine

Despite having been officially announced for several years now, construction on the Trans-Iranian Canal Project has as of July 2017 still not begun. A number of reasons have been given to explain this delay including the high fixed costs required to build this canal. Official estimates put the cost of the project in the range of $10bn but other estimates suggest the figure could at least be double the amount. Whilst the authorities claim the returns from this project will justify the high cost of the project for the construction… Read more

AT&T and Time Warner looking to complement each other as part of merger deal

MarketLine

In October 2016, Time Warner and AT&T agreed to merge as part of a deal which would see AT&T paying $85.4bn for the merger to take place. The total transaction value would further take the deal up to $108.7bn adding in Time Warner’s debt. Despite the hefty cost, the merger deal makes perfect sense from a business point of view since through a merger with telecommunications giant AT&T, Time Warner is able to broadcast its globally recognized digital content to a much wider audience. AT&T meanwhile will be able to… Read more

Behind the Digital Iron Curtain: Rise of Chinese Silicon Valley

MarketLine

After a long period of rapid, double digit growth, the Chinese economy entered a more sustainable phase of development, based on innovation and consumption. Given the large population of 1.3 billion in China, the explosive growth of smartphone users, e-commerce, and online content consumption and creation led to a digital revolution in almost all industries and business sectors. While the Chinese Communist Party is trying to match its social control in the real world with the virtual world, which becomes more and more restrictive, the country’s internet is thriving and… Read more

UK General Election: Night of upsets points to an enormously difficult period to come for the UK

MarketLine

A fairly staggering set of results in June 2017 showed that in the UK, the political climate is changing. Almost every poll done in the run up to the election suggested a landslide victory for the incumbent government and the result was that the Conservative Party dropped its majority and only a deal with the DUP would provide them with a minority government. The implications of this result are wide ranging. It looks increasingly likely that there will be a second general election within six months as confidence in Theresa… Read more

Donald Trump: The Anti-Globalism Billionaire

MarketLine

Since revealing plans to run for President, billionaire businessman Donald Trump has expressed surprising anti-globalist sentiments. For a man who’s made his fortune running luxury resorts across the globe, it is initially surprising that he would claim to oppose trade blocs, a major driver of globalization and free trade. But perhaps Donald Trump is taking his new job seriously. The ex-businessman is now the most powerful person on the planet and that comes with certain responsibilities. The US people voted for a populist, radical alternative to the established political system… Read more

Medicaid: Trump’s budget proposal will not pass congress

MarketLine

It is that time of the year, when the White House is to put forward a proposal to congress underlying the US budget for FY2018 which is to set itself up for the next ten years. It is the first budget submission since Donald Trump took up presidency and there has already been speculation regarding his gloomy views on previous policy that aimed to benefit the less fortunate citizens of America. With the Affordable Care Act (nicknamed Obamacare) set up to help millions of Americans at potential danger of further… Read more

Namibia: NEEEF is not the solution. New policy would be bad for the economy

MarketLine

NEEEF is not the policy the Namibian economy requires at present. Businesses, however big or small, would be required to be at least 25% owned by people described as ‘disadvantaged persons’ and occupy half of board and management positions. The suggested legislation appears to be an effort towards what amounts to forced redistribution of wealth and has similarities with the land redistribution attempted in Zimbabwe. Ownership is not the only target: spending and investment would be subject to new controls too. Problems regarding implementation are legion. Given approximately 40% of… Read more

UK General Election: Theresa May’s Call for Election on June 8 an Opportunistic Masterstroke

MarketLine

On June 23, 2016, the United Kingdom voted to leave the European Union, a historic result the likes of which has never been seen. On June 5, 1975 the UK voted overwhelmingly in favor of remaining in the EU (then called the European Community) and the thought of any member state actually leaving is a very recent phenomenon. Many point to the Great Recession of 2008-09 as the catalyst for the most recent wave of anti-EU sentiment but opposition to the EU has existed in the UK since it joined… Read more

IMF appeases US trade policy

MarketLine

The first conference held by the IMF since the economic policy of the United States underwent dramatic changes following the election victory of Donald Trump already shows strong signs of moving towards a position designed to appease the new president. Differences between previous statements and policies from the IMF and what is now being espoused point towards the dropping of the pledge occurring for political purposes. Indeed the language used by the German Finance Minister and that of the IMF shows a stark contrast between views on the matter. Whilst… Read more

UK General Election: Prime minister May calls snap GE for 8th June, another big play risks further chaos for the country

MarketLine

On the 18th of April 2017 UK Prime Minister Teresa May announced a snap general election. For months political commentators had been speculating that this might happen, as the opposition parties were weak and the time looked opportune. Conservatives were strong and Prime Minister May needed a strong mandate to help with the exceptional political circumstances that the Brexit vote and subsequent resignation of David Cameron left behind. On announcement the argument provided was exactly this; that the Prime Minister wanted to build on her majority to make sure that… Read more

Iran Transport: Accelerating forward to the future

MarketLine

Iran is a growing hub for transportation, acting as a critical connection point between India and Russia/ Europe. Until recently, the Suez Canal served as the quickest transport route between India and Russia however with Iran undergoing rail infrastructure upgrades and also building part of the North-South corridor, Iran is set to become a key part of the ongoing development of transport links using the rail network. The North-South corridor has the potential to cut the transport time by around 50% and is sure to disrupt the naval transportation market…. Read more

President Park Impeached: Relations with chaebols could change forever

MarketLine

Legislation designed to curtail the strength of chaebols has traditionally failed to discover parliamentary approval; now amendments to several acts have found new impetus following the impeachment of the president. Whilst voters await the coming election, prospective candidates are seeking to assert their case for a change in how chaebols operate in the South Korean economy. However, despite the rise in support, problems will need to be overcome for lasting change to occur. Previous efforts have fallen flat; this time there is a far greater chance of success. Moon Jae-in,… Read more

OPEC: Supply restriction amid global oil glut

MarketLine

OPEC, consisting of 13 oil-rich governments, is the only true cartel allowed, albeit grudgingly, to operate in today’s global economy and it wields considerable power. In 1973 Arab members imposed an oil embargo on the US during the Arab-Israeli war which tripled prices in a matter of months. Three times in recent history OPEC has stepped in to shore up the oil market, and each time prices rallied within days of action being taken. It is fair to say, therefore, that OPEC is a force to be reckoned with. Or… Read more

Brexit – the meaning of a messy divorce for the Euro area.

MarketLine

The lending channel between many industries and banks in the Euro area has been far from normal since 2008. This factor puts Britain in a better position to negotiate Brexit next year. The Euro area will embark on a period of further unprecedented slowdown by detaching itself from the world’s fourth largest economy. Credit to industries coming from the banking sector is key for the region to grow as the single currency area has a bank-based model as opposed to a capital market model. Debt financing to companies is largely… Read more

Donald Trump: Incoming president likely to create bigger mess than his hair

MarketLine

Donald Trump’s policy detail is rather thin, but based on multiple and contradictory things he has said on the campaign trail, shrinking of the state via both reduced tax income and federal spending while promising to build a border wall and renovate infrastructure, protectionist stances on international trade agreements while promising a Brexit Britain a comprehensive deal, an expansion of dirty industries at the expense of environmental regulation, and undermined central bank independence. Donald Trump’s election to the Oval Office was considered one of the most divisive and bitter elections… Read more

Trump’s win is good news for US economy

MarketLine

Donald Trump’s whole mantra during his campaign (as evidenced by his rather natty headwear) has been to ‘Make America Great Again.’ In order to do this, he knows he must make the US competitive on the global stage. He has pledged to reduce taxes heavily for low and middle income Americans and also to make sure that the wealthy (including corporations) do not pay too much as that undermines jobs. This should help boost the currently questionable level of job creation and to increase spending power, which should in turn… Read more

An inconvenient truth about the euro area

MarketLine

The creation of the euro area was a mistake. Top ranks of business and political classes in Europe were expecting an explosion in trade and economic activity following the creation of the single currency area in 2002. The euro would lubricate the integration of the newly formed euro area. It would be possible to achieve higher levels of growth and long-term prosperity. Unfortunately, the real GDP of the euro area increased only by 1.8% per year between 2001 and 2006 and by merely 0.2% per year within the 2007 -2015… Read more

Uncertainty over political events trumps fundamentals as markets fall

MarketLine

On Thursday June 23, 2016 the UK went to the polls to decide on its future as a member of the European Union (EU). By a small margin, the country opted to leave and despite the fact that no steps to enact Article 50 have yet been taken by Theresa May and her government, speculation about an imminent implosion of the British economy has been rife, damaging the value of the Pound and serving as a rather convenient scapegoat for everything from companies’ poor performance to increased prices, to political… Read more

Post-Brexit effect on inflation

MarketLine

The UK voted to leave the European Union (EU) in a referendum undertaken in June 2016. The separation will be complex and will take many years to complete. However, the effects have been felt immediately. Since Brexit, the pound has dropped by 18%. After an initial tumble following the result, it fell further in October following Prime Minister Theresa May’s signal that she would use Brexit to tighten borders, even if it means losing access to the EU’s single market on the current terms. On October 18, the Office for… Read more

IKEA use solar offering to reinforce green credentials

MarketLine

IKEA have made a headline grabbing return to the domestic solar panel market, only months after ending the relationship with their original partner, the Hong Kong firm Hanergy Thin Film Power Group. This time round, they have teamed up with one of the most established names in the market, Solar Century, to offer an affordable solar energy package. This will initially be available in three stores and online, with this being extending to all of their UK stores by the end of the summer. While IKEA takes pride in its… Read more

UK Economy – held back by euro area Treaty

MarketLine

The Maastricht Treaty has been slowly asphyxiating any possibility of sustained economic recovery in Britain. It has been partially responsible for the erratic recovery of manufacturing, production and construction industries. The Gross Domestic Product (GDP) of Britain peaked back at pre-crisis level in the second quarter of 2013 driven mainly by the growth of the services industry. This industry is 13 per cent larger in value compared to 2009 (figure below). Production, construction and manufacturing industries are on average 7% smaller than their pre-crisis levels. The majority of UK industries… Read more

Youth unemployment in Germany: Low rates disguise true picture of growing Hartz-IV dependency

MarketLine

Compared to many neighboring European countries, of both similar and lesser levels of economic development, Germany’s youth unemployment rate is healthy. It is the lowest of any country in Europe except Iceland and is way below both the Euro Area and EU average. Whereas many European countries encourage their people to pursue academic studies at university to further themselves, Germany has long had a policy of creating and offering vocational training places for those who either do not want to attend or who are not suited to university and this… Read more

Negative Interest rates: Desperate times, desperate measures

MarketLine

Central banks across the developed world have taken to Negative Interest Rate Policies (NIRP) in a radical attempt to stimulate demand- the idea being that those sitting on assets will be penalized in an attempt to either lend the capital or spend it. The UK’s Monetary Policy Committee (MPC) has not ruled out the idea, but Japan, the European Central Bank, Denmark, Sweden and Switzerland have enacted NIRP already for a variety of reasons; Japan and the ECB in last ditch efforts to stimulate demand, Denmark, Sweden and Switzerland in… Read more

Better the devil EU know?

MarketLine

Thursday 23rd June is set to be one of the most hotly-anticipated and controversial days in British political history, as UK citizens vote in a referendum to decide whether or not they wish to remain a member of the European Union. The referendum – promised by Prime Minister David Cameron in his 2015 election manifesto – has now entered the final stages of campaigning. As both the ‘in’ camp, led by Britain Stronger in Europe, and their opponents Vote Leave ramp up the pressure it is still almost impossible to… Read more

The Olympic Stadium and West Ham’s deal of the century

MarketLine

The Olympic Games was held in London in 2012 much to the joy of the majority of the British public. After an arduous bidding process, the London delegates overcame the bid from Paris and scenes of jubilation from famous sports personalities and members of the royal family were filtered around the world. The Olympics is viewed as a festival of sporting accomplishment and it requires a huge investment from the government, and in turn, the people of the nation in which the event is being hosted. Once the bid was… Read more