Good morning, Quartz readers!
What to watch for today
News from the EU budget wrangle. Europe’s leaders have gathered in Brussels to debate the European Union’s budget for the next seven years. It basically comes down to how much of their own tax collections richer nations want to share with poorer ones. The sums are already mind-bogglingly huge, but the European Commission wants a 5% increase to more than €1 trillion. Britain’s David Cameron has argued against that, and wants something more like a €973 billion ceiling. Poorer nations such as Portugal and Poland are pushing for increases. The Euro hit a six and a half month high today, partly on fresh optimism about Greece, but also in anticipation Cameron will get his way.
Because the US economy is still a turkey, tougher Thanksgiving journeys all round. Americans are traveling in style today. That is, uncomfortable, crowded and miserable style, piling onto buses or budget airlines following days of searching for deals online. Airlines struggling with rising fuel costs have raised holiday fares. Still, pity those poor business travelers who will be traveling comfortably, in business or upper class, to meetings.
Foreign investors get more excited about India. Rivals of India’s ruling coalition have failed to push through 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.
While you were sleeping
Gaza ceasefire held out. Despite the bombing of a bus in Tel Aviv, the ceasefire Israel agreed to with Gaza, brokered by Egypt, held out. The two sides have not made friends. There was celebratory gunfire in the streets of Gaza at the perceived Isreali humiliation of agreement to a climbdown. But the agreement is being hailed by the US as an important first step towards reaching a long-term peace solution.
Nicolas Sarkozy faced uncomfortable questions about “cash-stuffed envelopes.” Zut alors. The former French president appeared 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 is probing accusations made by Bettencourt’s former accountant, Claire Thibout, that politicians like Sarkozy regularly received envelopes of cash from the heiress and her family. Sarkozy has consistently denied the claims, and is not on trial today. The questioning is part of a case to determine whether Bettencourt is competent to run her own affairs. Sarkozy could be charged with taking advantage of of the 90-year-old heiress.
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.
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
There is nothing wrong with high-rise housing projects, as Singapore’s public housing system shows.
Hedge funds are not very good. Their fees are too high, their returns are correlated, and their marketing statistics are suspect, says a long-only fund manager.
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 less equal opportunity now 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 “In 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.
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.
Banks might start scanning our ears. British scientists believe a person’s ears are better identifiers than faces or fingers, which are already used in biometric recognition processes that aim to fight identify theft.
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.
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