All posts by Alison Meadows

About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com

IMF Warns of Global Economic Slowdown

Economy, Emerging Markets, , ,

The International Monetary Fund is warning that the risk of a global financial crash is on the rise due to China’s economic slowdown and a concomitant decline in world trade. This double-headed decline has the effect of de-stabilizing emerging economies which are burdened with large debt.

The IMF, the Washington-based lender of last resort, explained that because of the large scale borrowing by emerging market countries with debts which are highly susceptible to increased interest rates, policymakers need to act fast to strengthen the financial system.

The cautionary statements come after a difficult summer of global market chaos caused by China’s currency devaluation, instituted to increase its export flow. That action set off a panic reaction in world-wide markets, which crashed. Investors suddenly understood the real meaning of China’s economic slowdown.

Earlier in the week the IMF lowered its prediction for global growth in 2015 down to 3.1 percent. That number is the smallest since the low point of the 2009 downturn.

US Companies Will Not Benefit From Iran Nuclear Deal

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Despite the fact that the United States led the negotiations with Iran to sign an agreement to limit nuclear weapons proliferation, US companies will not benefit economically from that agreement. Companies based in other countries, such as in Europe, Russia and China, will however be able to gain financially from the accord.

This is due to the fact that much of the sanctions placed on Iran from the United States are decades old, ever since relations between the two countries have been strained. The US has imposed an embargo on Iran since 1995, aimed at checking the development of weapons of mass destruction and missiles, Iran’s support for terrorism around the world, and human rights abuses.

During the recent negotiations between the Obama administration and Iran the US stuck to its position of only lifting sanctions connected to nuclear proliferation, despite Iran insisting that the US lift all sanctions immediately. In the end, though, due to high pressure from Iran and others to sign the deal, the US backed down and agreed to end the arms embargo after five years and the missile embargo after eight years. The remaining US sanctions will stand.

In addition, the nuclear-related sanctions that the US will end are on foreign, and not US companies. The sanctions prohibit non-US companies from investing in the oil sector of Iran, trading in oil, and financing those transactions. Doing business with Iranian banks and other companies connected to the sanctions will also be prohibited.

The bottom line is that US companies will still not be allowed to do business with Iran,  even after the accords are signed, except in very limited situations.

US Stepping Up Aid to Nepal After Massive Earthquake

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Nine days after a 7.8 magnitude earthquake shook Nepal, killing over 7,300 people and wounding thousands more, US transport planes began to bring rescue teams and supplies to the more remote areas of the country which have been devastated by the quake.

A US Air Force C-17 aircraft and four Osprey tilt-rotor helicopters arrived late on Sunday, allowing the US to step up its rescue mission in the beleaguered country located between India and China. US Brigadier General Paul Kennedy said that pilots would begin flying sorties from Kathmandu, the capital, to far-flung areas, starting on Monday.

“They’re going to make an immediate difference,” he said. “We’ve got search and rescue teams waiting to go out to the remote areas, we’ve got relief supplies, especially shelters. Most people don’t understand that a shelter is the most pressing need, so we’re going to take these things out starting tomorrow (Monday) morning.”

 

The most recent official death toll in Nepal was figured to be 7,250 with about 14,000 wounded. Officials cautioned that it is expected that the final death count will be much higher. In bordering countries China and India at least 100 people have been reported as killed.

Senator Warren Wants Big Banks Reigned In

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US Senator Elizabeth Warren
US Senator Elizabeth Warren

In order to get the financial system in the US to work better for average people, US Senator Elizabeth Warren, Democrat from Massachusetts, is calling on Republican law makers to take steps to reign in big banks.

Warren is calling on Republicans to break up big banks, put limits on bank executive bonuses and change tax laws to encourage financial institutions to take fewer risks with their capital. She is using the interest spurred by the current tax season to make her points, and added that her suggestions would not be hard to implement. The overall result of her talking points would be to create a more stable financial environment that would be less prone to the kind of disaster that befell the country between 2007 and 2009.

She would like to see a break-up of the largest banks by elected officials. Placing restrictions on the Federal Reserve on their lending policies to banks during financial crisis should also be implemented so banks understand that they cannot turn to the government for a bailout when things go south for them. Perhaps that realization will help the banks to act more responsibly.

Changing the tax code would also help banks and other financial bodies to refrain from taking too high risks, or indulging in unfair banking practices. Lawsuits filed have shown that many bankers had persuaded homeowners into mortgages that they could not afford and would not qualify for. The bankers said that they could skip paying their mortgage or pay a lower amount until they went through the process. Then the banks turned around and tried to foreclose on the home when the homeowners were disqualified from the program, according to the lawsuits.

AP Journalists Uncover Slave Trade in Southeast Asia

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Maya Bay, Ko Phi Phi Le, Thailand. Photo by yeowatzup
Maya Bay, Ko Phi Phi Le, Thailand. Photo by yeowatzup

A team of Associated Press journalists were led to a town in Southeast Asia where forced labor, slave trafficking and slavery is going strong after a year-long investigation into the fishing industry there. In Benjina, a small town in the depths of eastern Indonesia which is situated on two islands, the journalists were able to interview over 40 current as well as former slaves. Many of the slaves told the reporters that they had been forced to work on boats under dire conditions, paid nothing or very little. They described being taken onto boats for months or even years at a time under the brutal supervision of overseer captains.

Also found in Benjina were eight slaves held captive in a locked cell. The journalists were able to take video footage of the scene. In the evening, hiding in the darkness, the AP group took a small boat to come close to a trawler with slaves on board who began yelling at the journalists for help, beging them to take them home.

The journalists observed the supply chain from slave-caught fish to a refrigerated cargo ship heading for Thailand. They tracked the boat’s 15-day trip using signals sent by satellite. They met up with the vessel in Samut Sakhon, Thailand and watched as the fishy cargo was off-loaded from the boat and place into trucks during four evenings. They followed the trucks to processing plants, cold storage and the largest wholesale fish market in Thailand.

Finally the journalists established the chain from slave labor to market using US Customs documents with the names of Thai companies that sell fish to the United States. Although the food goes to other countries in Europe and Asia, the AP concentrated on the information they were able to get about specific US companies, where custom records are in the public domain.

To protect the men who were photographed, interviewed or videotaped for the story, the International Organization for Migration and Indonesian Marine Police were informed about the men. The police then took the men away from Benjina and they are now waiting for their cases to be processed. The goal is to have the men returned to their homes in Myanmar. Unfortunately there are still hundreds of other slaves still in the town and on the surrounding islands.