By Peter Ward June 24, 2016
Brexit. ©PublicDomainPictures.net
Britain Brexits, PM Resigns
The U.K. voted to leave the European Union in a national referendum on Thursday, causing Prime Minister David Cameron to resign and markets to plunge.
Cameron, who had backed the campaign for the U.K. to remain in the E.U, announced his resignation on Friday. The British pound sterling fell dramatically as the outcome of the referendum became clear. At one stage the currency’s value fell to $1.3236, a 10% decline and its lowest point since 1985.
The FTSE 100 index fell more than 8% at the start of the day, and recovered to stand around 4% lower. The U.K.-focused FTSE 250 was down 8% in afternoon trading. British banks were hit hard. Barclays and the Royal Bank of Scotland fell about 30%.
Panama Canal Trouble
So-called roll-on/roll-off ships, such as this one pictured here at Miraflores locks, are among the largest ships to pass through the Panama Canal. ©By Dozenist – Own work, CC BY-SA 3.0
On Sunday, a Chinese vessel became the first ship to pass through the Panama Canal’s new set of locks. But although the occasion was celebrated in Panama, critics abound. A New York Times article published on Wednesday detailed numerous concerns with the construction of the new locks project, also known as the Third Set of Locks Project.
In July 2009, the contract for the construction of the new locks was awarded, and the decision prompted shock, as the winner was an outsider in the bidding process, a consortium led by a Spanish company with severe financial problems. The consortium’s bid of $3.1 billion was a billion dollars less than that of its nearest competitor, a budget that put the quality of the work in serious jeopardy, according to the article.
The project suffered from numerous setbacks, which resulted in a two-year delay in completion. Disputes over $3.4 billion in construction costs, more than the entire projected cost of the project, resulted in work stoppages. A higher than expected risk of earthquakes was found at the canal site. There were technical issues as well, such as leaks in a major wall due to faulty concrete.
“In simple terms, to be successful, the new canal needs enough water, durable concrete and locks big enough to safely accommodate the larger ships,” write Walt Bogdanich, Jacqueline Williams and Graciela Mendez in the Times. “On all three counts, it has failed to meet expectations, according to dozens of interviews with contractors, canal workers, maritime experts and diplomats, as well as a review of public and internal records.”
The feature is illustrated with interactive diagrams explaining the way the Panama Canal works and its historical importance, as well as a video showing leaks in a concrete wall of the new project.
Home Sprinkler Fight
Firefighters putting out fire. ©Pixabay
South Carolina’s homebuilding association is under fire for putting lives at risk. An investigative article published on Wednesday by ProPublica examines the lengths to which the lobbying group has gone to prevent legislation from passing that would make the installment of fire sprinklers in homes mandatory.
In 2012, U.S. homebuilders celebrated victories in more than a dozen state capitals, where they had successfully blocked plans to require sprinklers in new homes. But in the spring of that year, South Carolina’s fire marshal, Adolf Zubia, forced through a vote in favor of upholding the legislation, and quickly felt the wrath of the homebuilders’ association, which was aided by state Governor Nikki Haley, according to the article.
Even before the meeting in which the vote passed was adjourned, Zubia received a text telling him to report to the office of Gov. Nikki Haley the next morning. Zubia says he was then pushed to resign, becoming the second state fire marshal advocating for sprinklers to be forced out. The council that sets state building codes soon reversed its decision.
The article details how U.S. homebuilders have spent millions of dollars to block the sprinkler legislation on a state level, well away from the spotlight of Washington, in an effort to avoid widespread attention.
The writers of the U.S.’ model building codes insist that sprinklers will save lives but homebuilders believe the legislation adds unnecessary costs. Sprinkler systems add $4,000 to $5,000 to the cost of an average house, according to the article.
IMF Warns U.S.
Christine Lagarde, IMF managing director. © By World Economic Forum from Cologny, Switzerland
The International Monetary Fund released its annual assessment of the world’s economy this week, and warned the U.S. that it has high levels of poverty and inequality.
The report, unveiled on Wednesday, said the U.S. economy was “overall in good shape,” but cautioned that too many Americans were leaving the workforce and living below the poverty line. The IMF expects the American economy to grow 2.2% this year, a decrease from its 2.4% forecast in April. But it did keep its 2017 forecast of 2.5% growth.
The IMF cited U.S. Census data, which shows 46.7 million people, or 15% of Americans, living below the poverty line, including 1 in 3 households led by women. IMF managing director Christine Lagarde warned that “not only does poverty create significant social strains, it also eats into labor force participation, and undermines the ability to invest in education and improve health outcomes.”
“Our assessment is that, if left unchecked, these four forces-participation, productivity, polarization and poverty-will corrode the underpinnings of growth and hold back gains in U.S. living standards,” she added.
The IMF urged the U.S. to improve childcare and family benefits to draw more women into the workforce and recommended immigration reforms and reworking the disability insurance program.
Clinton Cash Dwarfs Trump’s
Donald Trump ©Michael Vadon
Does money win general elections? Presumptive Republican nominee Donald Trump better hope not, as the New York Times ran a data-driven article showing how little money he has raised compared to Democrat Hillary Clinton and former Presidential candidates. (Other recent articles have suggested he is not even attempting to run for president, but only to enrich himself and his companies.)
The Trump campaign ended the month of May with just $1.3 million on hand, compared to Clinton’s $42 million. The Republican nominee in 2012, Mitt Romney had $17 million at this stage, and Obama in the same year had $110 million.
Trump secured the Republican nomination with a relatively small amount of money and a small staff, but some of his donors have begun to raise concerns he cannot compete with Clinton on such a small budget, according to the article.
Clinton’s staff is almost 10 times larger than Trump’s, who says he will rely on the Republican National Committee to fill most of the roles. Trump managed to win the nomination while spending less than any of the other leading candidates, partly due to the amount of free media coverage he received. mediaQuant estimated that Trump earned $639 million in free media in May.
The article does point out one area where Trump has outspent Clinton – merchandise. The reality TV star has $907,000 on items like his trademark baseball hat.
This Week’s Top Headlines
U.K. Exit Heightens Fears of Disintegration – Stephen Fidler, Wall Street Journal
Wall Street hates Elon Musk’s Tesla-SolarCity plan – Chris Isidore, CNN Money
Blackberry loss widens to $670m – BBC
Macy’s CEO Terry Lundgren to Pass Reins to Deputy Next Year – Lindsey Rupp, Bloomberg News
Messaging Startup Twilio Surges 60% In IPO Debut – Antoine Gara, Forbes
U.S. jobless claims near 43-year low; new home sales decline – Lucia Mutikani, Reuters
Clash of Clans maker Supercell becomes Europe’s first ‘decacorn’ – Alex Hern, The Guardian
Asia-Pacific Wealth Exceeds North America’s for First Time – Giles Broom, Bloomberg News
GE Sells French Consumer-Credit Unit to Private-Equity Firm – Inti Landauro, Valerie Venck, The Wall Street Journal
AP Møller-Maersk considers break-up – Richard Milne, Financial Times
First bid for McDonald’s China franchises confirmed – BBC
