Focus: German constitutional court tries to rein in ECB

Focus: German constitutional court tries to rein in ECB
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Updated 12 May 2020

Focus: German constitutional court tries to rein in ECB

Focus: German constitutional court tries to rein in ECB

What happened:

US President Donal Trump wants to advance to phase 2 of reopening the economy. The White House is considering disbanding its coronavirus task force by the end of the month, while nearly 70 percent of Americans remain afraid of catching the disease.

The UK has surpassed Italy as Europe’s worst affected country, with 195,000 confirmed cases and 29,427 deaths at time of writing. The UK government is considering how to reopen the economy: Chancellor Rishi Sunak is said to be considering how to wean the country off the £39 billion ($48.25 billion) workplace support schemes he was forced to establish at the start of the crisis. The British Chambers of Commerce advocate doing so at a measured pace, warning against a “falling off the cliff” scenario.

Euro-area services Purchasing Managers Index (PMI) came in at 12, and the composite PMI at 13.6. The Shanghai composite index rose by 0.63 percent as traders came back after a 5-day break.

German factory orders fell by 15.6 percent in March, the biggest slump since data collection started in 1991. This is significant as Germany is the manufacturing powerhouse of the world’s largest economic bloc.

The earnings season continues:

Disney has taken a $1.4 billion coronavirus hit. Revenues were up 21 percent to $18 billion. Its theme parks performed particularly badly, while the movie streaming channel Disney+, which debuted Nov. 12 last year, had reached 54.5 million subscribers by May 4. Earnings per share fell by more than half to $0.60.

UniCredit came in with a first quarter loss of €2.7 billion ($2.9 billion). The bank shored up its loan loss provision to €1.26 billion, up from the previously announced €900 million. Credit Agricole shored up its loan loss provisions to €621 million.

BMW’s first quarter operating profit fell by 78 percent to €589 million. Its car sales plunged by 20.6 percent or 477,111 units. Motorcycle sales dropped by 9.9 percent.

The second quarter will be worse for car makers if April sales data are anything to go by. In the UK alone new car registrations plunged by 97 percent to 4,321, reaching levels last seen in 1946.

Germany’s constitutional court ruled yesterday that the European Central Bank (ECB) did not adhere to proportionality when purchasing assets under the Public Sector Purchase Programme (PSPP), which has spent €2.7 trillion since 2015 on the financial crisis quantantive easing scheme.

The court voiced its concerns that the bank’s primary mandate was inflation and that the PSPP risked protecting defunct companies, having an adverse effect on savers. 

Germany’s highest court gave the ECB three months to answer its queries.

The bank responded that it was fully committed to “doing everything necessary within its mandate to ensure that inflation rises to levels consistent with its medium-term aim,” endeavoring to transmit price stability to all jurisdictions in the eurozone.

This had an immediate effect of the euro-dollar exchange rate. However, the options market seems to suggest a more relaxed medium-term outlook.

Background:

Germany’s highest court is casting aside a 2018 ruling by the European Court of Justice that the PSPP was legal. This has has injected uncertainty over the independence of the ECB and seems to underline the bank’s political underpinnings. It also echoes German uneasiness over prolific expansionary policies by the ECB as well as over risk-sharing among ECB member states.

The verdict cast a shadow over the ECB’s €750 billion Pandemic Emergency Purchase programme (PEPP), at a time when the bank is considering expanding its response to COVID-19. While the original public sector quantitative easing program has strict limits aimed at ensuring proportionality, such as how much of each nation’s debt it buys, most of those do not apply to the PEPP.

If the German constitutional court is not satisfied, the ECB risks the German Bundesbank (the ECB’s largest shareholder) not participating in the PEPP. This decision remains in the purview of the Bundesbank.

The PEPP has had a big impact lowering government bond yields of highly indebted southern EU member states. Immediately after the verdict, Italy’s two-year bond rose by 20 basis points.

Going forward:

The G20 Debt Service Suspension Initiative for some of the world’s poorest nations could free up more than $20 billion by the end of 2020 according to the Institute of International finance. The institute warned, though, that legal and financial obligations would warrant a case by case approach.

All official bilateral creditors of the G20 participate in the initiative. The G20 Action Plan also publicly calls on private creditors to join the initiative on comparable terms on a voluntary basis.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources

 


Shooting in Texas capital leaves 14 wounded; one suspect still at large

Shooting in Texas capital leaves 14 wounded; one suspect still at large
Updated 36 min 11 sec ago

Shooting in Texas capital leaves 14 wounded; one suspect still at large

Shooting in Texas capital leaves 14 wounded; one suspect still at large
  • Two of the injured were in hospital in critical condition and the other 12 were in stable condition

TEXAS: Fourteen people were wounded after two men opened fire at each other in a busy entertainment district in downtown Austin, Texas early on Saturday, police said, adding that one of the suspected shooters remained at large.
Gunfire erupted at about 1:30 a.m. in the Sixth Street area, a popular nightlife destination in the state capital, Austin Police Department Interim Chief Joseph Chacon said in a news conference on Saturday afternoon.
"This does appear to be an isolated incident between two parties," he said. "Most of the victims were innocent bystanders."
Police officers who were nearby rushed to the scene where they applied tourniquets and performed CPR on victims, Chacon said.
Two of the injured were in hospital in critical condition and the other 12 were in stable condition. There were no deaths, Chacon said.
The Austin Police Department said on Saturday evening that one suspect had been arrested with the help of the US Marshals Lone Star Fugitive Task Force, and that officers were continuing to follow up on leads to apprehend the remaining suspect.


Saudi Arabia’s Tawakkalna app operating in 75 countries worldwide

Saudi Arabia’s Tawakkalna app operating in 75 countries worldwide
A man displays his details on his mobile phone using the Tawakkalna app as he enters a mall in Riyadh, Saudi Arabia. (REUTERS)
Updated 13 June 2021

Saudi Arabia’s Tawakkalna app operating in 75 countries worldwide

Saudi Arabia’s Tawakkalna app operating in 75 countries worldwide
  • An app launched last year by Saudi authorities to help track coronavirus infections is available in 75 countries worldwide
  • The Tawakkalna app was recently updated to show someone’s COVID-19 health status, showing them to be vaccinated or infected, and now functions as a “passport”

JEDDAH: Countries in the first phase of the app’s international availability include: Kuwait, the UAE, Bahrain, Qatar, Oman, Jordan, Algeria, Sudan, Somalia, Morocco, Tunisia, Djibouti, Libya, Egypt, Mauritania, Indonesia, Afghanistan, Uzbekistan, South Africa, Lebanon, Nigeria, India, Eritrea, Ethiopia, Sri Lanka, Philippines, Bangladesh, Portugal, Czech Republic, Denmark, Sweden, the UK, Norway, Austria, the US, Japan, Greece, Spain, Estonia, Italy, Ireland, Iceland, Brunei, Belgium, Poland, Germany, Singapore, Switzerland, France, Finland, Cyprus, Kazakhstan, Croatia, Canada, Latvia, Luxembourg, Lithuania, Liechtenstein, Malta, Malaysia, Monaco, New Zealand, Netherlands, Maldives, and Azerbaijan.

Saudi Arabia’s Ministry of Islamic Affairs office in Jazan temporarily closed the Budaiya Mosque in Abu Arish governorate after it was confirmed that the imam had COVID-19.

Field teams undertook preventive and precautionary measures, including sterilization operations and comprehensive maintenance, in preparation for reopening the mosque and receiving worshippers at a later date.

The ministry noted the keenness of worshippers and their active role in reporting mosques that did not comply with health and safety instructions and failed to implement preventive measures.

FASTFACTS

464,780 Total cases

446,960 Recoveries

It asked everyone to report future similar incidents by calling 1933.

Saudi Arabia on Saturday reported 16 more coronavirus-related fatalities, taking the overall death toll to 7,553.

There were 1,077 new cases, bringing the total number of infections 464,780. There are 10,267 active cases, of which 1,562 are in a critical condition.

Of the newly recorded cases, 348 were in Makkah, 225 were in Riyadh, 149 were in the Eastern Province, and 69 were in Madinah.

Authorities said a further 906 patients had recovered from the disease, increasing the total number of recoveries to 446,960.

The country has so far carried out more than 20.27 million PCR tests, with 75,059 carried out in the past 24 hours.

Testing hubs and treatment centers set up throughout the country have dealt with hundreds of thousands of people since the onset of the pandemic.

Taakad centers provide COVID-19 testing for those who show no or only mild symptoms or believe they have come into contact with an infected individual.

Tetamman clinics offer treatment and advice to those with virus symptoms such as fever, loss of taste and smell, and breathing difficulties.

Appointments for both services can be made via the ministry’s Sehhaty app.

Saudi Arabia has vaccinated 15,633,787 people to date.

 


Hong Kong democracy activist Agnes Chow released from prison

Hong Kong democracy activist Agnes Chow released from prison
Agnes Chow rose to prominence as a student leader in the now defunct Scholarism and Demosisto political groups, alongside other outspoken activists. (AP)
Updated 13 June 2021

Hong Kong democracy activist Agnes Chow released from prison

Hong Kong democracy activist Agnes Chow released from prison
  • Chow, along with Wong and Nathan Law, who has since been given asylum in Britain, came to prominence as teenage activists during the 2014 protests to demand universal suffrage

HONG KONG: Hong Kong pro-democracy activist Agnes Chow was released from prison on Saturday after serving nearly seven months for her role in an unauthorized assembly during anti-government protests in the city in 2019.
The 24-year-old activist had been convicted together with her long-time activist colleague, Joshua Wong, for their involvement in an illegal rally near police headquarters in the Chinese-ruled city.
Wong remains in prison and the reason for Chow’s early release after being sentenced to 10 months in jail was not clear.
Some of her supporters wore black T-shirts and yellow masks and one held a yellow umbrella, a symbol of protests in the former British colony dating back to 2014.
Chow, along with Wong and Nathan Law, who has since been given asylum in Britain, came to prominence as teenage activists during the 2014 protests to demand universal suffrage.

FASTFACTS

• Agnes Chow was also arrested last year on suspicion of ‘colluding with foreign forces’ under the security law but has not faced any charges related to that.

• Fluent in Japanese, Chow has a sizable following in Japan, particularly on social media and had traveled to the country frequently before her arrest.

The three founded the democracy group Demosisto in 2016, which dissolved hours after Beijing passed a contentious national security law for the city last year amid fears it could be targeted under the legislation.
The law has stifled the pro-democracy movement and raised concern about prospects for the autonomy Hong Kong was promised under a “one country, two systems” formula when it was handed over to China in 1997.
Chow was also arrested last year on suspicion of “colluding with foreign forces” under the security law but has not faced any charges related to that.
Fluent in Japanese, Chow has a sizable following in Japan, particularly on social media and had traveled to the country frequently before her arrest. She often posted on Twitter in Japanese.


Election for ‘new Algeria’ gets low turnout amid opposition boycott

Election for ‘new Algeria’ gets low  turnout amid opposition boycott
Updated 13 June 2021

Election for ‘new Algeria’ gets low turnout amid opposition boycott

Election for ‘new Algeria’ gets low  turnout amid opposition boycott
  • A huge number of candidates — more than 20,000 — vied for the 407-seat legislature, once dominated by a two-party alliance considered unlikely to maintain its grip on parliament

 

ALGIERS: Voter turnout was low midway through the day as Algerians voted on Saturday for a new parliament in an election with a majority of novice independent candidates running under new rules meant to satisfy demands of pro-democracy protesters and open the way to a “new Algeria.”

Tension surrounded the voting in the gas-rich North African nation. Activists and opposition parties boycotted the election.

Authorities have tightened the screws on the Hirak protest movement in recent weeks, with police stopping weekly marches and arresting dozens, the latest a Hirak figure and two journalists. The three prominent opposition figures, including journalist Khaled Drareni, a press freedom advocate, were freed early Saturday, three days after their arrests.

The early election is supposed to exemplify President Abdelmadjid Tebboune’s “new Algeria,” with an emphasis on young candidates and those outside the political elite.

A huge number of candidates — more than 20,000 — are running for the 407-seat legislature, once dominated by a two-party alliance considered unlikely to maintain its grip on parliament. Islamist parties all offered candidates.

FASTFACT

The three prominent opposition figures, including journalist Khaled Drareni, were freed early on Saturday, three days after their arrests.

It’s the first legislative election since former President Abdelaziz Bouteflika was forced from office in 2019 after 20 years in power. Tebboune was elected eight months later, vowing to remake Africa’s largest country but with no sign of abandoning the preeminent though shadowy role of the army in governance.

“We are looking for change,” voter Mohammed Touait said at a polling station. “I am 84 years old, and today I woke up at 8 a.m. because I still have hope for change.”

The Constitutional Council announced on Saturday that it would be 15 days before results of the balloting are known because of the number of candidates and the need to ensure against fraud, which marked past elections.

The participation rate among Algeria’s 24 million voters was 10 percent midway through the day, the electoral authority announced.

The president, at the start of the day, brushed off as irrelevant the number of people who vote.

“What is important is that those the people vote for have sufficient legitimacy,” Tebboune said after casting his ballot in Algiers.


What We Are Reading Today: The Selected Letters of Nikos Kazantzakis

What We Are Reading Today: The Selected Letters of Nikos Kazantzakis
Updated 13 June 2021

What We Are Reading Today: The Selected Letters of Nikos Kazantzakis

What We Are Reading Today: The Selected Letters of Nikos Kazantzakis

Author: Edited and translated by Peter Bien

The life of Nikos Kazantzakis — the author of Zorba the Greek and The Last Temptation of Christ — was as colorful and eventful as his fiction.
And nowhere is his life revealed more fully or surprisingly than in his letters. Edited and translated by Kazantzakis scholar Peter Bien, this is the most comprehensive selection of Kazantzakis’s letters in any language.
One of the most important Greek writers of the 20th century, Kazantzakis (1883–1957) participated in or witnessed some of the most extraordinary events of his times, including both world wars and the Spanish and Greek civil wars.
As a foreign correspondent, an official in several Greek governments, and a political and artistic exile, he led a relentlessly nomadic existence, living in France, Czechoslovakia, Austria, Germany, Italy, Spain, the Soviet Union, and England.

He visited the Versailles Peace Conference, attended the 10th-anniversary celebration of the Bolshevik Revolution, interviewed Mussolini and Franco, and briefly served as a Greek Cabinet minister — all the while producing a stream of novels, poems, plays, travel writing, autobiography, and translations.