Good morning, Quartz readers!
What to watch for today:
India gets stuck in to the South China Sea row. India has said it is prepared to deploy naval vessels to protect its oil interests in the South China Sea after Vietnam’s state oil and gas company, Petrovietnam, accused Chinese boats of sabotaging one of its explorations. India is not one of the half-dozen countries involved in the dispute over maritime territory, but the Indian military seems to have deeper concerns over the rapid modernization of China’s navy.
Spotlight on big auditors’ work in China. The Securities and Exchange Commission has charged the Chinese affiliates of the world’s biggest five auditors with securities violations after they refused to share papers related to accounting-fraud investigations of nine unnamed US-listed Chinese firms. This represents a new twist in an ongoing argument over US and Chinese accounting laws. Luckily, an accord between Chinese and US authorities may resolve the impasse. Elsewhere, the Ontario Securities Commission accused big-four auditor Ernst & Young of failing to properly scrutinize the accounts of Sino-Forest, a Chinese logger that was listed in Toronto before it was accused of fraud and filed for bankruptcy protection.
Canada’s central bank (probably) leaves rates on hold. The bank, headed by soon-to-be governor of the Bank of England Mark Carney, is expected to keep interest rates low in the wake of GDP data showing the economy at its lowest level all year. Here are five things to watch for in the decision; monetary policy watchers will want to keep an eye on Eurostat’s producer inflation index, also released today.
Talks continue on control of the internet. A UN agency, the International Telecommunications Union, has been meeting in Dubai to discuss proposals for regulating the internet. Some American commentators say this sort of talk is terrible, as it may lead to repressive regimes being able to suppress comment about them made in freer societies. The New York Times’s Eric Pfanner argues that the panic is overblown. Talks began yesterday and continue today.
While you were sleeping:
Australia’s central bank cut rates. With economic indicators turning upside down and other developed economies easing policy, the Reserve Bank of Australia lowered interest rates by 0.25%, to 3%. This was a level not seen since the 2009 financial crisis and reflected fears that Australia’s China-dependent economy is deteriorating.
Very similar campaigns kicked off for Japan’s snap elections. Liberal Democratic Party leader Shinzo Abe, the nationalist former prime minister whose party wants to oust the current government on Dec. 16, is focusing his efforts on reviving the country’s failing economy and weaning the country off nuclear power. But Yoshihiko Noda, the current prime minister, has made similar pledges. Here is a summary of the main parties’ policies. Noda and Abe have different views on the yen and on inflation. It’s like that the election will result in yet another uncomfortable coalition that gets very little done, pundits say.
Abramovich played peacemaker in oligarch spat. Roman Abramovich, the Russian billionaire and owner of Chelsea football club, will spend $2 billion on 7.3% of Arctic miner Norilsk Nickel. This is part of a wider peace treaty (pdf) concerning governance and dividends that should end a long-running battle for control of Norilsk between two other billionaires, Oleg Deripaska of mining firm Rusal and Vladimir Potanin of the Interros conglomerate. Abramovich’s investment vehicle will get three seats on the Norilsk board while representatives of Rusal and Interros each get four. If either side breaches the agreement, the other can buy extra Norilsk shares at a discount.
Chinese shares slumped further. The nation’s benchmark index declined to its lowest level since 2009 today. The Shanghai Composite is now trading at its lowest price-to-earnings ratio since 1997, Bloomberg calculated. The issue may be government and corporate corruption. Or it could be declining corporate liquidity. Chinese firms like to play the market to boost their profits in good times. Some economists view the Shanghai exchange as a proxy for how cash-rich companies are.
The Republicans’ fiscal cliff plan fell flat. Their proposal involved cutting spending and closing loopholes, but no higher taxes. The White House dismissed the proposal, saying it contained no new ideas.
Speaking of the cliff: You can check out our new interactive whiteboard to track the whole ruckus at hastheusgoneoffthefiscalcliff.com. (Owing to a technical hitch with the camera flash you won’t see anything today until it’s light again in the US, but we’ll fix that.)
Quartz obsession interlude:
Steve Levine looks at the economics of renting nuclear-powered icebreakers to help ship liquefied natural gas. “The icebreakers have dangers transcending the ice—a fire broke out aboard the Vaygach last December, and killed two sailors. The Ob River itself had to be reinforced for the trip. So why take the risk? It is to tap growing Asian markets as Europe’s appetite for gas has fallen, and the US import market has vanished. When they ship east, producers going from Rotterdam to Yokohama (a roughly similar distance to Melkoya-Tobata) traverse just 8,500 kilometers, compared with 20,600 km if they go the long way through the Suez Canal. Shanghai, too, is shorter—14,875 km compared with 19,300 km the long way.” Read more here.
Matters of debate:
Once, China’s guarded leadership allowed its people some curiosity about the outside world. Now the People’s Republic is an open system but with closed minds.
Will a rushed constitutional reform end the dream of Egyptian democracy? Don’t expect much popular legitimacy from a “shotgun constitution.“
Is it time to dump bonds and buy stocks? Just do what Baron Rothschild would do: “Buy when there is blood in the streets.“
Legalizing marijuana in the US won’t stop the drug war in South America. Cartels have diversified into new businesses, so crimped drug revenue won’t bring them down.
What is the difference between self- immolation and suicide bombing? The first is an extreme form of protest, while the second is insurgent warfare.
Carbon on Mars? Nasa’s Curiosity Mars rover has found hints of carbon, though whether this is a building block for life on the planet remains unknown.
Surprising discoveries:
One BRIC hits the wall. Brazil’s growth is out of step with its colleagues. It may be time to start talking about the RICs instead. Or the RICIs.
New York Mayor Bloomberg wanted Hillary Clinton to take his job. But the Secretary of State, whose term ends next month, did not want the position.
Annuntio vobius gaudium magnum—habemus tweetam! The Pope is on twitter. And his tweets are Church doctrine.
Yes, the Duchess of Cambridge is pregnant. The UK rejoices at the news of a royal heir to its increasingly anachronistic throne, but we’re in it for the name jokes.
Meanwhile, the US birthrate falls to a record low. The biggest reduction was in births to foreign-born women, especially those from Mexico.
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