EsadeGeo Daily Digest, 31/10/2019

The Washington Post – Heather Long / Federal Reserve cuts interest rate for third time this year in effort to boost U.S. economy

  • The U.S. Federal Reserve reduced the benchmark American interest rate for the third time this year in an effort to boost the economy as the trade war and a global slowdown threaten to drag the U.S. economy down. However, it also signaled that its campaign of rate cuts has likely come to an end for now, with Fed Chair Jerome H. Powell defending that the current stance was “appropriate.”
  • The leaders of the Fed have stressed that they do not see a recession on the horizon. Instead, they have sought to portray these rate reductions as “insurance” cuts that are meant to give the economy extra protection in a world of rising uncertainty. “Weakness in global growth and trade developments have weighed on the economy and posed ongoing risks,” Powell said.
  • Fed leaders anticipated that growth would cool this year and next to around 2 percent, a level they considered the long-run trend pace for the economy. The rate cuts are meant to prevent growth from slipping much below that pace. Most business leaders say trade uncertainty has caused them to scale back investment as they wait and see what happens with talks between the world’s two largest economies. But the stock market remains very high, the unemployment rate is low, and the housing market in some parts of the country has shown new signs of life.
  • The Economist / America’s economy is resisting the pull of recession

Euractiv – AFP / Fiat-Chrysler, Peugeot group closing in on merger

  • Fiat Chrysler and Groupe PSA, the maker of Peugeot and Citroen cars, moved a step closer on Wednesday to creating a new global auto giant as the industry battles ever fiercer competition and the costly shift from traditional to electric cars. A source familiar with the matter stated that the board of PSA had approved the proposed multi-billion-euro tie-up with Italian-US Fiat Chrysler Automobiles (FCA) in a move that could create the world’s fourth largest automaker. The deal still needs to be given the green light by FCA’s board, but the two sides could formally announce that they are in exclusive talks later on Thursday. The merger plans come on the heels of a failed attempt earlier this year to combine Fiat Chrysler with Renault.
  • A combined FCA-PSA would produce the scale needed in an industry facing slowing demand, with 8.7 million vehicles sold per year and €184 billion in annual sales. If the deal passes, PSA could gain access to the lucrative US market while fulfilling the long-held goal for a merger to survive escalating costs and competition. Investors cheered the news. FCA shares in Milan closed up 9% on Wednesday while PSA shares added 4% in Paris.
  • Talks to merge FCA with Renault broke down in June, scuppered in part by resistance from the French government, which owns a stake in Renault – as it does PSA. France’s economy ministry said in a statement that the state would be “particularly vigilant” about jobs, corporate governance and preserving the industrial footprint when assessing any merger. Italian vice economy minister, Antonio Misiani, said it was “vital to preserve (existing) sites in Italy.”

The New York Times – Choe Sang-Hun / North Korea fires 2 projectiles in first test since talks stalled

  • North Korea launched ​two projectiles off its east coast on Thursday, its first such tests since talks with the United States stalled over the terms of ending its nuclear weapons program. The projectiles were fired from Pyongannam-do, a province surrounding Pyongyang, the North Korean capital, and they landed in waters between North Korea and Japan, the South Korean military said in a statement.
  • South Korean defense officials said they were studying the flight paths to determine what type of weapons the projectiles were, although Japan’s Ministry of Defense defended that they appeared to be ballistic missiles. The projectiles were the first such weapons that North Korea has tested since the Asian country fired its Pukguksong-3 submarine-launched ballistic missile on Oct. 2 into waters off Japan. It was the 12th time since early May that the North has tested ballistic missiles or other projectiles.
  • The launchings could be an effort by North Korea to prod the United States to get back to serious negotiations over its weapons program as it seeks relief from crippling sanctions. After the most recent talks ended without progress on Oct. 5, the North said that it had no desire to engage in “sickening negotiations” with the United States anymore. The North Korean ​Foreign Ministry said that it would not meet with American negotiators again until after Washington took “a substantial step” to “complete and ​irreversible withdrawal of hostile policy.”

Financial Times – Janan Ganesh / The false choice between diversity and welfare

  • Canada is something that is increasingly said to be impossible in real time and space. It is a cosmopolitan social democracy. A conflict between immigration and welfare is the given reason for the ordeal of the western left in recent years. The less that citizens have in common — goes this logic — the less willing they are to underwrite each other’s livelihoods. It is a theory worth taking seriously but it has calcified into something like fact, even as the evidence remains uneven. As France or Australia also portray, if there is a tension between diversity and solidarity, it is not a hard and fast one.
  • Nothing would disprove that tension more than the election as US president of Elizabeth Warren or Bernie Sanders. What makes these Democrats so unusual in American history is not their desire to expand the government. It is their willingness to do so in a high-immigration context.
  • The Sanders-Warren project is, indeed, big government without the flag. It is cosmopolitan social democracy. Even if Mr Sanders, faithful to his Marxism, is less taken with identity politics than with class, neither he nor Ms Warren are immigration sceptics. If this seems altogether too Canadian to sell south of the border, do not put too much store in the idea of immutable national cultures. It is now well-enough known that, on economics, most Americans are some way to the left of their stereotype as individualists.
  • The Guardian – Tom McCarthy / US House prepares for historic vote to formalize Trump impeachment process

The selected pieces do not necessarily reflect the views of Javier Solana and EsadeGeo. The summaries above may include word-for-word excerpts from their respective pieces.

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