Corrected News Items.

20 August 2019. By John Ellis.

1. Water crises are unfolding all across India, a product of population growth, modernization, climate change, mismanagement and the breakdown of traditional systems of distributing resources. India is running out of water in more places, in more different ways, putting more people at risk, than perhaps any other country. Nearly all of India’s biggest cities, including New Delhi, the nation’s capital, are rapidly depleting their groundwater reserves, and 40% of India’s people could lack drinking water by the end of the next decade, according to a 2018 report by NITI Aayog, a government-policy think tank.

2. China is rapidly catching up to the US in artificial intelligence (AI), especially in the areas of data and adoption as Beijing strives to become a global leader in the field by 2030, according to the authors of a new think-tank report. China “appears to be quickly reducing the gap” in AI, says the report from the global Center for Data Innovation released on Monday. “Compared with its Western counterparts, China’s techno-utilitarian culture is more willing to adopt AI if it provides a broader social good, even if some individuals believe there are ethical questions concerning AI.”

3. More than two decades since the Asia debt crisis gripped the region, global consulting firm McKinsey & Co. is warning that signs of a rerun are “ominous.” Increased indebtedness, stresses in repaying borrowing, lender vulnerabilities and shadow banking practices are some of the concerns cited by McKinsey in an August report. Whether building pressures are “enough to trigger a new crisis remains to be seen” but governments and businesses need to monitor potential causes, authors Joydeep Sengupta and Archana Seshadrinathan wrote.

4. The People's Bank of China launched a reworked, market-driven benchmark lending rate Tuesday in a move that amounts to an effective rate cut. The aim is to guide borrowing costs lower and improve access to capital, particularly for small businesses. The central bank directed banks to refer to the revamped loan prime rate, or LPR, when setting interest rates on new loans. It set the new rate at 4.25%, a 6-basis-point cut from the previous LPR, and 10 basis points lower than the government's 4.35% benchmark one-year lending rate. The LPR will now be based on prices submitted by lenders in terms of a spread over the interest rate on the central bank's medium-term open market operations.

5. Germany’s central bank has warned that Europe’s largest economy is likely to tip into recession in the third quarter, dragged down by a sharp drop in German exports and a decline in industrial production. The Bundesbank said in its monthly update that it expected Germany’s economy to remain “lacklustre” in the three months to September, adding that it “could continue to decline slightly” after it shrank by 0.1 per cent in the three months to June.

6. Germany will sell an ultra-long bond at a 0% coupon for the first time on Wednesday, in a flurry of debt sales in the next two weeks offering negative rates. The nation has previously only sold debt with a 0% coupon up to 10 years of maturity, including sales in the past month during a global debt rally. This week’s 30-year auction will test the continued demand for haven assets now that the whole of Germany’s yield curve is in negative territory.

7. Elkhart, Indiana, is flashing a warning sign about the economy. Capital of the country’s recreational-vehicle industry, the northern Indiana city and the surrounding area are watched by economists and investors for early indications of waning consumer demand for luxury items, often the first sign of economic anxiety.Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.

8. President Trump yesterday called for the Federal Reserve to sharply cut interest rates and again criticized the central bank’s chairman for a “horrendous lack of vision,” while reiterating his belief that the U.S. economy is strong. The president said in a pair of tweets Monday morning that the Fed should cut its benchmark interest rate by at least a full percentage point and resume its crisis-era program of buying bonds to lower long-term borrowing costs. Such moves would typically be considered only when the economy faces serious peril, which Fed officials don’t believe to be the case.

9. Several senior White House officials have begun discussing whether to push for a temporary payroll tax cut as a way to arrest an economic slowdown, three people familiar with the discussions said, revealing growing concerns about the economy among President Trump’s top economic aides. The talks are still in their early stages and have included a range of other tax breaks.

10. But maybe not. Bloomberg reports that the White House dismissed the idea that the administration is looking to cut payroll taxes as a way to bolster consumer spending, as economic indicators increasingly point to a potential downturn. More tax cuts for individuals are being discussed, but payroll taxes aren’t under consideration at present, a White House official said Monday. The Washington Post reported (Item #4) that administration officials were in the early stages of talks about whether a payroll tax cut could be a useful tool to help avert a potential economic slowdown. The administration is still debating whether to push Congress to approve the tax cut, according to that report.

11. The US government received a cool reception from Wall Street for the idea that it should issue super long-dated Treasuries that would mature in 50 or even 100 years, to take advantage of the collapse in borrowing costs. The Treasury said late on Friday that it would again test market appetite for bonds longer than the current 30-year maximum, following the biggest bond rally in more than two decades. Such a move would align the US, the world’s biggest borrower, with other “century bond” issuers such as Austria, Belgium and Ireland.

12. Facebook's messaging service WhatsApp is in talks with multiple Indonesian digital payment firms to offer their mobile transaction services, in a bid to tap the nation’s fast growing e-commerce sector, people familiar with the matter said. Indonesia could become the second country worldwide where WhatsApp introduces such services, as it awaits regulatory approval from India, its biggest market by users, that has been delayed due to local data storage rules. But unlike in India where it plans to offer direct peer-to-peer payment services, WhatsApp will simply serve as a platform in Indonesia supporting payments via local digital wallets due to tough licensing regulations, the sources told Reuters.

13. The state attorneys general in more than a dozen states are preparing to begin an antitrust investigation of the tech giants, according to two people briefed on the discussions, increasing pressure on the companies. The bipartisan group of attorneys general has not yet issued civilian subpoenas — known as civil investigative demands — to the companies. But state investigators plan to do so soon, though the precise timing is not yet set, said the two people familiar with the states’ plan.

14. The number of Russian nuclear-monitoring stations that have gone silent has doubled to four, an international arms-control official said, heightening concerns among observers that Russia is attempting to conceal evidence from an explosion at a missile-test site this month. Nuclear experts widely see the interruption in the data from the four monitoring stations as the Kremlin’s attempt to minimize information about the weapon that was being tested, which President Trump has said is a nuclear-powered cruise missile.

15. The U.K. said it was “extremely concerned” by reports that a Hong Kong consulate worker was detained during a recent trip to mainland China, a case that threatens to add to strains between Beijing and London. The statement came after news site HK01 reported that the U.K. consular employee, Simon Cheng, 28, was reported missing after failing to return from an Aug. 8 meeting in the adjacent city of Shenzhen.

16. President Trump appears to be backing away from potential support for gun background check legislation, according to White House aides, congressional leaders and gun advocates, dimming prospects that Washington will approve significant new gun measures in the wake of mass shootings that left 31 dead. Immediately after the carnage in El Paso and Dayton, Ohio, Trump said “there is a great appetite” for tightening background checks on people who buy firearms. But in recent days, Trump has focused in public remarks on the need to keep guns out of the hands of the mentally ill while emphasizing that the nation already has “very strong background checks right now” — positions that hew more closely to the views of the National Rifle Association.

17. A new Public Opinion Strategies (R) survey finds that 72% of suburban women think gun laws should be stricter, compared to 4% percent who said they should be less strict and 23% who said they should be kept as they are now. In addition, 55% said they think stricter gun laws would help prevent gun violence. And 90% support requiring universal background checks for gun purchases at gun shows or other private sales, which would require all gun owners to file with a national firearms registry. (Item flagged by Political Wire).

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