Quartz Daily Brief—Europe edition—EU budget, Sarkozy scandal, GM deal, Tofurky

November 22, 2012
November 22, 2012

Good morning, Quartz readers!

What to watch for today

EU leaders set for another budget battle. Europe’s leaders gather in Brussels to debate the European Union’s budget for the next seven years. There has been much pre-negotiation squabbling already. The European Commission wants a 5% increase to over €1 trillion. Britain’s David Cameron has argued against that, and wants something more like a €973 billion ceiling. Unsurprisingly, poorer nations such as Portugal and Poland are pushing for increases.

Nicolas Sarkozy faces uncomfortable questions about “cash-stuffed envelopes.” The former French president is set to appear in a French court to answer allegations that L’Oréal heiress Liliane Bettencourt, France’s richest woman, illegally financed his 2007 election campaign. A judge in Bordeaux will probe accusations made by Mrs Bettencourt’s former accountant Claire Thibout that Sarkozy regularly received envelopes of cash from the heiress and her family. Sarkozy has consistently denied the claims.

India’s plan to open up to foreign investment is in danger. Rivals of India’s ruling coalition will attempt a no-confidence vote in order to block the government’s plan, announced in September, to allow retail outlets to be majority-owned by foreign companies. A similar proposal that would allow furniture giant IKEA to enter the country is wending its way through the government.

US markets (and pretty much everything else) will be closed for Thanksgiving. If you want to understand this peculiarly North American ritual, you should start with the fact that President Barack Obama pardoned a turkey (two, in fact) for the crime of deliciousness. Even Americans are confused about the rules of this holiday.

While you were sleeping

Gaza ceasefire. Despite the bombing of a bus in Tel Aviv, Israel agreed to a ceasefire with Gaza, brokered by Egypt. Shells continued falling until the last possible minute. But the agreement is being hailed by the US as an important first step towards working towards a long term peace solution.

GM buys back part of itself, thanks to the government. Where do taxpayer bailout funds go? To help bailed out companies buy other bailed out companies they used to own, of course. General Motors has shrugged off painful memories of  that $49.5 billion government rescue and announced plans to spend $4.2 billion on the Latin American and European auto lending divisions of car finance company Ally Financial. Ally, which is 74% owned by the US government, used to be called GMAC, and was part of GM until 2006. It was also one of America’s largest subprime lenders and received $17 billion of bailout funds during the financial crisis. “We’re bringing those parts of Ally back into the family,” GM financial officer Dan Ammann told reporters yesterday. Heart-warming.

More positive Chinese data—but don’t be too reassured. The nation’s huge manufacturing sector saw expansion in November for the first time in 13 months, by one measure. HSBC’s Flash (i.e., preliminary) Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November (a reading above 50 indicates expansion). There were other positive signs in October, such as rising exports and industrial output. But the bounce appears to be the result of government stimulus measures, and the country still has many long term imbalances to solve. Start “planning for China’s fall“, says one columnist.

US consumers not quite out of the fetal position. Analysts thought the US consumer sentiment index, currently at a five-year high, would rise further, but it did not. One culprit could be the impending fiscal cliff. Perhaps Americans have already realized that those who will be hit hardest by the fiscal cliff are the poorest. This could mean bad news for Black Friday, one of the biggest shopping days of the year in the US.

Obama pardoned both turkeys. Phew. For a while there, it looked like either Gobbler or Cobbler, the two birds that were pitted against each other in a Facebook contest to choose the national Thanksgiving bird, might be unceremoniously murdered. But the nice Mr President has pardoned them both. Animal rights group PETA argues his bird pardoning is somewhat pointless, unless the Presidential supper involves Tofurky instead of meat.

Earth to warm as much as it did since the last Ice Age. The World Bank says we’re headed for 4 degrees of global warming by the end of the century (other estimates put it as high as 6 degrees), but what does that mean, anyway? Dead oceans, vast deserts, extreme weather, and many of the world’s most populous cities abandoned or radically reshaped.

Quartz obsession interlude

Companies in the developing world are borrowing money at amazingly low rates, reports Quartz’s Simone Foxman. “The Chinese government pays more to borrow than [Chinese search giant] Baidu does. Baidu is not alone in taking advantage of the changing global economy, where typical “safe assets” like US and German bonds yield next to nothing, and old stable bets like Italy and Spain have suddenly become risky. Investors looking for anything in between have been forced to turn to emerging markets, and to emerging-market giants like Baidu.” Read more here.

Matters of debate

Gilded ages aren’t great for morale. Inequality drives unsustainable levels of consumer debt, and the results are killing capitalism, argues Robert Skidelsky. There is now less equality of opportunity in the US than in most other rich democracies. And as Jill Lepore reminds us, it was thanks to the last Gilded Age in America that “[i]n 1913, the income tax was introduced, not only to undergird the Treasury with a stable source of revenue, but also to answer populist rage at the growing divide between the rich and the poor.”

Islands in the South China sea are the next intractable military standoff. “We’d like to shake hands with China. But it’s difficult to shake hands when your foot is on my foot,” said Henry Bensurto Jr., secretary general of the Philippines’ maritime commission.

How nations attract the best and brightest. Countries all over the world are engaged in selective immigration—in which smart and capable applicants are allowed to immigrate—but not the US, at least not enough.

When in doubt, inflate! Inflationary monetary policy in Japan could slow its economy even further, but in the US, Ben Bernanke seems to be going full steam ahead with devaluation of the dollar.

Austerity will be good for the USA. America should stop messing around and just go over the fiscal cliff already, argues a whole mess of pundits.

Surprising discoveries

$100 bills are weirdly popular. 77% of US currency in circulation is a $100 bill–and not all of that is drug money.

So very high on snacks. The troubled history of caffeinated junk food.

America gets right with its creditors. The US budget deficit is shrinking faster than at any time since World War II.

Good governance can’t buy me happiness. Singapore has the most emotionally dead populace on earth.

It’s never too late to work for nothing. “Returnships” are internships for people in their 40s.

Getting push notifications in your dreams. 90% of people 18-29 take their smartphones to bed.

Best wishes from Quartz for a productive day. Please send any news, queries, stuffing recipes or tales of outwardly high functioning economies whose citizens lead lives of quiet desperation to hi@qz.com or hit “Reply” to this email.

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