Carsten Volkery at Der Spiegel reports that the EU leadership have agreed upon a compromise insisted upon by Dublin where guarantees of sovereignty will be included in the text of the Lisbon Treaty. As a result, Irish Prime Minister Brian Cowen has announced that Ireland will hold a referendum on the treaty in October.
"The EU has provided guarantees to Ireland that it will remain independent in determining tax policies, military neutrality and abortion law (Ireland has one of Europe's most restrictive abortion policies). The sovereignty guarantees are expected to be anchored in EU law as a treaty protocol in the mid-term future."Polls show that the Irish appear more receptive to the treaty, given the current economic crisis. Well worth reading in full.
2. THE EU TO BEGIN CONSIDERING HOW TO TRANSFER CARBON CAPTURE TECH TO CHINA & INDIA
Pete Harrison at Reuters reports that a draft document from the European Commission suggests that the EU will begin to determine how best to help India and China develop carbon capture technology next week.
"The European Union will start a consultation process on how finance and technology should be delivered to China and later India. This could be critical in securing their commitment to a new global deal on climate change at talks in Copenhagen in December.3. CHINA PROTESTS ADB LOAN TO INDIA, 74% OF CHINESE RESPONDENTS REGARD INDIA AS A THREAT
'China builds, every year, as much coal-fired power plant as the entire UK generating capacity,' said a report prepared for consultations with industry and seen by Reuters on Friday.
'Unless a way can be found of making this climate-compatible, we can never meet our climate objectives, regardless of what action we take in Europe,' it added."
The India Times reports that the Chinese foreign ministry has issued a statement condemning the Asia Development Bank's recent decision to approve a $2.9 billion loan to India, $60 million of which is earmarked for a watershed project in the Arunachal Pradesh, where the border between the two countries is disputed.
The statement said:
"China expresses strong dissatisfaction to the move, which can neither change the existence of immense territorial disputes between China and India, nor China's fundamental position on its border issues with India.India has recently been strengthening the defenses in the region, including moving additional troops into it. The Chinese media has in the past few weeks been attacking New Delhi for putting "fresh strains on the relationship." In an interesting data point, a recent poll in China found that 74% of respondents look upon India as a threat.
As a regional institution on development, the ADB should not intervene in the political affairs of its members. The adoption of the document has not only dealt a severe blow to its own reputation but also undermines the interests of its members."
4. CHINESE IMPLIED OIL DEMAND RISES 5.96% IN MAY YOY
Winnie Lee at Platts reported yesterday that Chinese implied oil demand rose by 5.96% in May from the year previous. Crude imports rose by 3.55% to to 16.62 million metric tons (~ 3.92 mb/d). It is the second consecutive month where implied demand has risen year over year, which could be interpreted as a sign the economy is rebounding. On the other hand, the director of China's National Energy Administration, told reporters on June 1st that "a substantial portion" of the crude oil trade in the first half had been due to stockpiling, and seemed to indicate that China's tanks were full--see Daily Sources 6/1 #2.
5. FRANCE STATS OFFICE PREDICTS ECONOMY WILL STABILIZE IN Q4
Eurointelligence reports that French statistical office INSEE released its latest forecasts this morning which see the economy stabilizing in the fourth quarter.
"Employment is expected to continue to fall, for 2009 the loss is expected to reach 700,000 jobs in the private sector. Consumption growth is still positive (forecast at +0.7%), though saving rates are about to rise slightly. France seems thus in a much better position than the rest of the euro area, for which GDP is forecast to contract by 5.6% and consumption by -1.6%."6. BANK OF MEXICO CUTS BENCHMARK INTEREST RATE TO 4.75%
Jens Erik Gould at Bloomberg reports that the central bank of Mexico today cut its benchmark interest rate by 0.5% to 4.75%.
"The [bank's] board 'considers that its easing cycle is close to ending,' the bank said in a statement. 'Future actions that might be taken will possibly be of smaller magnitude and consistent with both the evolution of the economy and the performance of inflation.'7. ANGOLA STILL PLANS TO LAUNCH SOVEREIGN WEALTH FUND THIS YEAR
The economic contraction has been 'severe' in the first half of the year, and is a greater risk than inflation, the bank said. The comments signal that it will probably cut a quarter point next month and then keep the rate unchanged for the rest of the year, said Gabriel Casillas, chief economist for Mexico and Chile at UBS AG."
Henrique Almeida at Reuters reports that Angolan Finance Minister Severim de Morais said today that Luanda intends to launch a sovereign wealth fund in 2009 to invest its oil wealth abroad.
"Plans to create the fund, known as the Fundo Soberano Angolano, were announced in November by President Jose Eduardo dos Santos, but the project has since been delayed due to the global economic downturn.8. CREDIT CARD SQUEEZE HURTING SMALL BUSINESSES, UNEMPLOYMENT IN THE WEST RISES TO 10.1% IN MAY
Asked whether the fund would be launched this year, de Morais replied: 'Yes, our aim is to launch the fund in 2009.'"
Yves Smith at naked capitalism notes that the credit card squeeze is hurting small businesses, historically the largest source of job creation in the US.
"The importance of credit cards as a source of funding to small companies has gone largely unnoticed in the wider world, yet is well know to experts on entrepreneurship. Indeed, Amar Bhide, in his landmark The Origin and Growth of New Businesses, pointed out that, contrary to popular mythology, venture capital played a trivial role in forming new businesses. Personal savings, loans or investments from friends and family, and credit card borrowings were the most important sources.Well worth reading in full. Meanwhile, the Associated Press reports that the Labor Department announced today that the unemployment rate rose to 10.1% in the American West in May.
And before readers chide supposedly foolish owners for paying interest, consider: using credit cards includes the astute use of float, which can give companies six or seven weeks of free money. And in better days, card companies offered products targeted to small business owners with favorable rates, often from 9% to 14% (and also offered them even cheaper 'life of the balance' deals, now a distant memory). With interest tax deducible, this was a viable source of funds, particularly for companies that faced short-term financing needs, such seasonal sales patterns.
As we noted, American Express, first to target small businesses, halted its credit line programs as of early 2009 (regular corporate ards for small businesses are still in effect). Advanta, which focused solely on this market, has found itself saddled with a heap of bad debt (default rates of 20%) and has stopped extending new credit as of early June."
"By region, the Midwest had the second-highest rate, at 9.8%, underscoring the toll of job losses in manufacturing. The South’s unemployment rate was 8.9%, and the Northeast had the lowest at 8.3%."Unemployment rose in all but two states last month.