All posts by Francisco Marques Pereira

(NYT) The Most Important Number in Finance Is Going Away. Wall St. Isn’t Prepared.


Andrew Bailey, chief executive of Britain’s Financial Conduct Authority, warned banks against “misplaced confidence in Libor’s survival” last week.CreditSimon Dawson/Bloomberg

In the world of finance, there is one number that arguably matters more than any other. You can find it in the small print on adjustable-rate mortgages and private student loans, it is the basis for enormous corporate loans, and it underpins nearly $200 trillion of derivatives contracts.

But it is on the way out, and Wall Street has not worked out how to replace it.

The number in question is called Libor, which is short for the London interbank offered rate. Published daily, Libor is an interest rate benchmark, or the basis for many other interest rates. If you have heard of it, that might be because it was at the center of a market-manipulation scandal that resulted in jail time for some traders and billions of dollars in fines for many banks.

There are other important financial benchmarks, of course — the Federal Reserve’s fed funds rate and the yield on the 10-year Treasury note among them — but Libor has emerged over time as the dominant rate for determining interest payments on almost all adjustable-rate financial products.

Now, regulators are stressing that the benchmark could be gone by 2021.

What will replace it? Nobody knows for sure.

As traders speculate about what will happen to financial markets when Libor disappears, regulators appear to be worried that banks are not taking the coming change seriously enough. To move away from Libor requires vast amounts of work, and given how tightly woven it is into the financial fabric, it isn’t the kind of thing anyone wants to see rushed.

“I hope it is already clear that the discontinuation of Libor should not be considered a remote probability,” Andrew Bailey, chief executive of Britain’s Financial Conduct Authority, said in a speech last week.

Warning against “misplaced confidence in Libor’s survival,” Mr. Bailey said that the number of financial contracts with interest rates derived from the benchmark continued to grow. Regulators in the United States, including the chairman of the Commodity Futures Trading Commission, have raised similar warnings.

On Thursday, a meeting that is scheduled at the Federal Reserve Bank of New York will focus on preparing for a world without Libor: A panel is expected to address crucial details, including the best ideas for language that should be used to replace Libor in contracts for financial products like business loans, derivatives and floating-rate notes.

In simplest terms, Libor is a number produced daily in response to a theoretical question posed to a group of large banks: What interest rate would you have to pay to borrow money from other banks?

Libor is calculated by stripping out the highest and lowest estimates and averaging the rest. There are many different versions of Libor, calculated in different currencies and over different borrowing time periods.

The most widely used variant applies to borrowing dollars for three months. On Tuesday, that number — expressed as an annual rate — was 2.34 percent.

If you have taken a loan with a variable interest rate, there is a good chance it is based on Libor. (The interest rate on such a loan is typically Libor plus a certain number of percentage points.) The same is true for loans to big companies and other institutions that borrow money, including cities, pension funds and university endowments.

Libor’s biggest use is in financial contracts known as derivatives. Some, like interest-rate swaps, are used by institutions to protect themselves from future swings in interest rates and by traders to place bets on which way rates will move in the future.

At the end of 2016, there were more than $190 trillion of these Libor-based contracts outstanding all over the world.

(That’s trillions with a T.)

A Rate That’s Easy to Manipulate

A big problem with Libor is that it has been incredibly easy to manipulate.

In part, that is because the question on the Libor survey does not ask the banks, “What did you pay to borrow this morning?” Instead, it asks the more subjective “What do you think you would have to pay?”

With a relatively small number of banks responding to the survey, it did not take traders long to realize they could skew the number higher or lower by coordinating with colleagues at other banks.

Because bank traders make high-stakes wagers using derivatives whose values are based in part on Libor, they could vastly improve their chances of making money if they could influence the very thing they were betting on.

The market-manipulation scheme started to unravel in 2008 when The Wall Street Journal published an article casting doubt on Libor’s integrity. That prompted government investigations that eventually revealed what was going on.

Banks collectively paid many billions of dollars in penalties for their roles in trying to rig Libor. A few former traders have gone to prison, including Tom Hayes, a former UBS and Citigroup trader who is serving an 11-year sentence in England.

A Lifeline From Nervous Regulators

After all the fines, penalties and prison sentences had been handed out, the only reason some banks still respond to the Libor survey is that British regulators pressed them to do so. The regulators fear that banishing the rate in an abrupt, disorderly way could endanger the broader financial system.

Regulators decided they would give the industry time to prepare itself for a world without Libor. After 2021, regulators will not push banks to participate in the Libor survey. Many people expect that absent that prodding, banks will stop responding, and Libor will disappear.


For the record, the group that produces Libor — ICE Benchmark Administration — says it has held talks with banks about a voluntary agreement to continue submitting rates that would allow some form of Libor to be published into the middle of the next decade. No agreement has yet been struck.

“Ultimately this is up to the banks,” said Timothy Bowler, the group’s president. “The banks have got to decide whether they want to keep Libor or not.”

The transition to a post-Libor world would not be painless. Remember those $190 trillion of Libor-linked derivatives? Hardly any of those instruments — essentially contracts between two parties — provide a workable option for what to do if Libor were to vanish.

In a worst-case scenario, banks and their customers would effectively have to negotiate how to end Libor-based contracts over the phone, said Darrell Duffie, a Stanford University finance professor. For a sense of what is at stake, Lehman Brothers was a party to more than 900,000 derivatives contracts when it went bankrupt in 2008, according to research publishedby the Federal Reserve Bank of New York.

“It’ll be really nasty in terms of costly, difficult workouts,” he said.

‘A Lot of Inertia,’ and Perhaps a Huge Mess

The scope of the challenge is beginning to make people on Wall Street nervous. In the past few weeks, research reports have been published and conference calls with experts have been convened to consider ways to avert what could be a huge mess.

An industry group sponsored by the New York Fed has developed a new benchmark rate to replace Libor: the Secured Overnight Financing Rate, or SOFR. It began to be published in April.

Contracts must be changed. Computer systems must be updated. Customers must be communicated with. Such costly administrative work does not yield bonus-increasing fees, and it is not generally considered glamorous on Wall Street.

“There’s a lot of inertia. There’s a lot of reluctance to make the change,” said Richard Berner, a former Wall Street economist and director of the Treasury’s Office of Financial Research until the end of 2017. “There’s a lot of work to do.”

(ECO) Bruxelas quer que os residentes também paguem taxa aeroportuária em Lisboa

(ECOBruxelas considera que a aplicação da taxa aeroportuária em Lisboa a apenas os passageiros não residentes é um ato de discriminação, pelo que exige que seja alargada também aos residentes.

A Comissão Europeia enviou, esta quinta-feira, um parecer fundamentando a Portugal reclamando que a taxa do aeroporto de Lisboa passe a ser conforme com as regras da União Europeia (UE) e também aplicável a passageiros residentes.

Bruxelas deu um prazo de dois meses para que a taxa do aeroporto de Lisboa seja aplicável também a residentes em Portugal, considerando que a cobrança apenas a não residentes constitui uma discriminação em razão da nacionalidade, o que viola as leis da UE.

O envio de um parecer fundamentando é a segunda fase do processo de infração e se a situação não for regularizada, a Comissão Europeia pode levar o caso perante o Tribunal de Justiça da UE.

(ECO) Endividamento da economia atinge novo recorde. São já 724.703.000.000 de euros

(ECOO endividamento da economia voltou a aumentar em maio, tendo atingido um novo recorde. O total do endividamento do Estado, empresas e famílias superou os 724 mil milhões de euros naquele mês.

Oendividamento da economia voltou a aumentar em maio, tendo atingido um novo recorde. O total do endividamento do Estado, empresas e famílias portuguesas superou os 724 mil milhões de euros naquele mês, o valor mais elevado de sempre, revelam os dados do Banco de Portugal.

“Em maio de 2018, o endividamento do setor não financeiro situava-se em 724,7 mil milhões de euros, dos quais 322,4 mil milhões respeitavam ao setor público e 402,3 mil milhões ao setor privado”, detalha o banco central na nota de informação estatística divulgada esta quinta-feira.

“Relativamente a abril de 2018, o endividamento do setor não financeiro aumentou mil milhões de euros, em resultado do incremento de 300 milhões de euros no endividamento do setor público e de 700 milhões de euros no endividamento do setor privado”, acrescenta ainda.

Endividamento da economia atinge novo recorde

O montante em dívida por parte do setor não financeiro representa quase cinco vezes o valor da riqueza bruta produzida pelos portugueses num ano. Os últimos dados disponibilizados pelo Banco de Portugal, relativos a março, colocavam o endividamento nos 369,6% do Produto Interno Bruto (PIB) nacional.

Maio marcou mesmo um recorde no que toca à dívida pública na ótica de Maastricht, a que conta para Bruxelas, tendo superado os 250 mil milhões de euros em termos brutos. Mas é expectável que o endividamento público venha a registar uma descida ao longo do ano — sobretudo depois do reembolso ao mercado de um montante de 6,6 mil milhões de euros em junho.

No que toca à dívida privada, o Banco de Portugal explica que houve um aumento do endividamento externo das empresas em 500 milhões de euros. Já as famílias e particulares registaram um crescimento do endividamento face ao setor financeiro de 200 milhões de euros.

(Reuters) EU mulls coal, pharma, chemicals tariffs if U.S. hits cars: Wiwo

(Reuters) The European Union will consider introducing tariffs on coal, pharmaceuticals and chemical products from the United States if President Donald Trump imposes restrictions on European cars, Germany’s Wirtschaftswoche magazine reported on Thursday.

“Depending on progress made during the visit of European Commission President Jean-Claude Juncker, the member states will decide on their future strategy at the end of next week,” an unnamed EU diplomat was quoted as saying in the magazine.

The list of countermeasures could then be agreed on, said the magazine.

Juncker heads to Washington next week to discuss strained trade relations between the EU and U.S. after Trump imposed tariffs on EU steel and aluminum, and following his repeated threats to extend those measures to European cars.

Wirtschaftswoche said any steps taken in response to tariffs on European cars would have to be broader than earlier, targeted countermeasures following U.S. tariffs on steel and aluminum.

Juncker is due to meet Trump on July 25 and has said he will explain that the European Commission coordinates trade policy for the 28-nation bloc.

(Reuters) China to use ‘counter-cyclical’ measures to curb FX volatility

(Reuters) China’s foreign-exchange regulator said on Thursday it was well-equipped to keep currency markets stable amid intensifying trade frictions with the United States and prepared to counteract cross-border capital outflow volatility if it arises.

Wang Chunying, spokeswoman at the State Administration of Foreign Exchange (SAFE), told reporters the regulator would bolster “macro-prudential management” and “micro-level market supervision” and use “counter-cyclical” measures to deal with instability.

While Wang did not elaborate on details of such counter-cyclical measures, analysts see her comments as a warning that the central bank would not tolerate aggressive one-way speculation against the currency.

“We will make counter-cyclical adjustments to cope with short-term volatility in foreign exchange markets to maintain stability in the financial system and balance in international payments,” she told a media briefing.

The remarks did not appear to halt the decline in the yuan in onshore CNY=CFXS or offshore CNH=D3 markets, where the currency has weakened about 7 percent against the dollar since the end of the first quarter and continued to slip on Thursday.

The yuan’s declines have come as Washington and Beijing stepped up their tit-for-tat exchange of tariffs and threats of tariffs on eachother’s goods.

As of 0805 GMT, the onshore spot was trading at 6.7583, 378 pips or 0.56 percent weaker than the previous late session close. Its offshore counterpart was trading 0.41 percent weaker than the onshore spot at 6.7860 per dollar.

Ken Cheung, senior Asian FX strategist at Mizuho Bank in Hong Kong, said Wang’s remarks signaled that the foreign exchange regulator still had many tools at its disposal to deal with yuan depreciation expectations.

“If the yuan falls too fast over too short a period of time, the central bank would still take some action and make some comments,” Cheung said.

He added, however, that Thursday’s comment was not as strong as what the People’s Bank of China (PBOC) governor Yi Gang offered when the yuan hit 6.7 per dollar two weeks ago, which had a calming effect on the market.

“(The comments) shouldn’t affect the market until the day when the policy is implemented,” said a trader at a foreign bank in Shanghai, referring to counter-cyclical measures.

Traders and economists have been on alert for intervention or other attempts to slow the yuan’s slide since it posted its worst month on record in June.

Wang said SAFE is paying close attention to cross-border capital flows and that it had been improving “contingency plans and policy reserves”.

While her comments about “counter-cyclical” measures did not make reference to specific market tools, some analysts have speculated in recent weeks that authorities may re-apply a “counter-cyclical factor” in their daily foreign exchange management to dampen depreciation expectations and slow the yuan’s latest downtrend.

In May 2017, after a period of decline for the yuan, the PBOC added the secret counter-cyclical factor to its formula for calculating the midpoint reference rate for trading of the currency. The central bank effectively removed the x-factor at the start of this year, as the yuan rebounded.

Policy insiders told Reuters earlier this month that Beijing was expected to make use of other tools it has honed since 2015 to curb speculation and volatility in the yuan.

SAFE spokeswoman Wang said on Thursday the foreign exchange regulator could adjust its tool kit for managing cross-border capital flows, which includes the previously used FX risk reserves.

China’s central bank implemented reserve requirements for financial institutions settling foreign exchange forward yuan positions in July 2016 before scrapping the requirements last September, when Beijing was anxious to quash one way bets on the yuan as outflows ease and exporters face strain.

Wang told the briefing that China’s foreign debt levels were under control and that SAFE would closely monitor any changes and provide policy guidance as needed.

(JN) Na bola com mulheres bonitas – Nuno Melo

(JN) “Falamos de forma individual com todas as operadoras para que deixem de focar nas raparigas que podem ser consideradas atraentes. É trazer uma carga sexista desnecessária ao futebol”. O pedido mais idiota do fenómeno desportivo universal foi feito assim, pelo dirigente da FIFA Federico Addiechi. Se há certeza dos nossos tempos é que a imaginação delirante do “politicamente correto” consegue ser estupidamente infinita, mesmo na crença estranha de um mundo virtualmente assético e assexuado.

E se o jogo for de futebol feminino? E se se der o caso de as jogadoras, a começar, serem realmente bonitas? Não sendo olhar pecado – por este caminho, já não é certeza -, será que o italiano responsável pelo programa de diversidade da FIFA reparou alguma vez na sueca Josefine Oqvist, na brasileira Laisa Andrioli, na australiana Ellyse Perry, na americana Hope Solo ou na francesa Corine Franco, só para ter em conta alguns, poucos, exemplos ? Fazer o quê? Filmar poucochinho em campo, para que não se notem? E depois o quê? Não focar entre os adeptos os feios, os negros, os brancos, os amarelos, os coxos? É que onde acaba o sexismo também pode haver quem ache que começa a discriminação.

Dito isto, lá em Zurique, na sede da FIFA, não terão mesmo nada melhor com que se entreter? É que assim de repente, antes do pecado da beleza, expurgada das bancadas para uma espécie de “buraco negro” das teleobjetivas, há certamente outros assuntos que beneficiariam muito do zelo crítico e censório da FIFA. A tendência para uma certa prodigalidade nos gastos, os representantes corrompidos por causa das escolhas para a realização de campeonatos, os processos judiciais e detenções por fraude, extorsão e lavagem de dinheiro, o pagamento de 71 milhões de euros durante cinco anos a Joseph Blatter, Jerôme Valcke e Markus Kattner, até as campanhas descaradas de Michel Platini – inabilitado depois de receber de Blatter dois milhões de francos suíços – contra Cristiano Ronaldo, escolhido várias vezes com toda a justiça melhor jogador do Mundo, a contragosto do francês. Grande Cristiano…

Já agora, conviria que a FIFA se recordasse que durante muito tempo a atenção prestada às mulheres ajudou precisamente a mostrar que o futebol não é um desporto de homens apenas. Num estádio de futebol cabem todos. E na verdade, nas alegrias do fenómeno desportivo, todas as pessoas são bonitas. Deixem-nas lá em paz.


(Independent) Google to be fined record €4.3bn EU fine over Android – reports


EU commissioners are due to discuss an antitrust probe on Wednesday morning1
EU commissioners are due to discuss an antitrust probe on Wednesday morning

Google is expected be fined around €4.3bn by the European Union over Android apps today, setting a new record for antitrust penalties, according to a person familiar with the EU decision.

The fine, to be announced about midday on Wednesday, ends an EU probe into Google’s contracts with smartphone manufacturers and telecoms operators.

According to Bloomberg reports, Google Chief Executive Officer Sundar Pichai had a call with EU Competition Commissioner Margrethe Vestager late Tuesday for a so-called state of play meeting.

This is a usual step to alert companies of an impending penalty, according to one of the people, who asked not to be named because the discussion is private.

EU commissioners are due to discuss an antitrust probe on Wednesday morning, according to an online agenda.

The European Commission fine will exceed last year’s then-record €2.4bn penalty following an investigation into Google’s shopping-search service. Google owner Alphabet Inc. and the commission both declined to comment on the Android fines.

(Economist) The missing middle of the Trump-Putin meeting

(Economist) The summit offered up a graphic reaffirmation of what was already known

THE story of the meeting between President Donald Trump and President Vladimir Putin in Helsinki has a beginning and an end, but no middle.

It began with a statement from the American president. The lowly state of Russo-American relations, he tweeted, was not the fault of the Russian government for seizing Crimea, shooting down a passenger airliner, interfering in America’s presidential election or using a banned nerve agent to kill citizens of a close ally on its own soil. No, it was the fault “of US foolishness and stupidity and now, the Rigged Witch Hunt”.

It ended with a joint press conference that John McCain, a Republican senator, described as, “one of the most disgraceful performances by an American president in memory.”

In the middle was a void, in which the two presidents met with nobody else in the room but their interpreters. For those who watch Mr Trump daily and have observed his habit of being confrontational with other people when at a safe distance and then seeking to please them when face-to-face, this encounter seemed freighted with risk. Would he give away Crimea by mistake? Would he commit to some Russian-led military initiative in Syria? In fact this part seems to have gone relatively well. Both presidents reported that they talked about nuclear weapons, including the Intermediate-Range Nuclear Forces Treaty (INF) which covers short- and medium-range nuclear missiles. The chances of them signing an extension to the new Strategic Arms Reduction Treaty (START) are perhaps greater now than they were before the meeting. That is not nothing.

Yet it is hard to pinpoint a decisive change in American foreign policy that came out of the Helsinki meeting. What it offered instead was a reaffirmation of things that America already knew about its president. Mr Trump thinks that the world benefits when America and Russia have close relations, and that “the United States has been foolish” on this point. He takes the judgment of America’s intelligence services that Russia intervened in the 2016 election campaign to be a personal insult, an accusation that he needed outside help to beat Hillary Clinton. He will readily believe the word of a former KGB agent over the views of the CIA or FBI on this point. Americans who question this are liable to be described by their president as enemies of the people. The probe run by Robert Mueller is “a disaster for our country”. It was jarring to see Mr Trump say these things standing on a podium next to Mr Putin, but they are all things he has said before, countless times. This is not a performance. He really means it.

One part, near the end of the press conference, is worth quoting at length to give an unmediated sample of the president’s thinking:

REPORTER, Associated Press: President Trump, you first. Just now, President Putin denied having anything to do with the election interference in 2016. Every U.S. intelligence agency has concluded that Russia did. My first question for you, sir, is: who do you believe? My second question is: would you now, with the whole world watching, tell President Putin, would you denounce what happened in 2016 and would you want him to never do it again?

PRESIDENT TRUMP: So let me just say that we have two thoughts. You have groups that are wondering why the FBI never took the server. Why haven’t they taken the server? Why was the FBI told to leave the office of the Democratic National Committee? 

I’ve been wondering that. I’ve been asking that for months and months and I’ve been tweeting it out and calling it out on social media. Where is the server? I want to know where is the server and what is the server saying? 

With that being said, all I can do is ask the question. 

My people came to me, Dan Coats [director of national intelligence], came to me and some others they said they think it’s Russia. I have President Putin. He just said it’s not Russia.

 I will say this: I don’t see any reason why it would be. But I really do want to see the server but I have, I have confidence in both parties.

 I really believe that this will probably go on for a while but I don’t think it can go on without finding out what happened to the server. What happened to the servers of the Pakistani gentleman that worked on the DNC? 

Where are those servers? They’re missing. Where are they? What happened to Hillary Clinton’s e-mails? 33,000 e-mails gone, just gone. I think in Russia they wouldn’t be gone so easily. 

I think it’s a disgrace that we can’t get Hillary Clinton’s 33,000 e-mails.

 I have great confidence in my intelligence people but I will tell you that President Putin was extremely strong and powerful in his denial today and what he did is an incredible offer. 

He offered to have the people working on the case come and work with their investigators, with respect to the 12 people [GRU officers indicted by the Department of Justice]. I think that’s an incredible offer. OK? Thank you.

For readers who are rubbing their eyes at this point, it is important not to lose sight of a few things that will endure once this summit is over. Mr Mueller’s probe has gathered so much detail about the activities of the GRU that its future activities would seem to be compromised. Russia’s economy is weak, and American sanctions will not be lifted by the Senate anytime soon. Some of America’s institutions are not doing their job. But some of them quietly are.

(Forbes) Is Portugal the Next Fashion Capital of the World?

(Forbes) There was the October 2017 relaunch of its local Vogue edition – which has since taken a visual direction that seemingly prioritizes artistic freedom over commerce – in addition to being the native land of the founder behind luxury e-tail giant Farfetch. Add to that, the export of some of the modelling industry’s most in-demand faces. Plus, local manufacturers dealing with demand from luxury apparel houses the world over. In short – the ingredients allowing Portugal to be integrated into the global fashion conversation, in an unprecedented manner.


Nonetheless, in what appears to be a coming ofage process, the country’s local fashion designers are yet to join the ranks of their more esteemed Europe-based counterparts. Amidst it all, is Eduarda Abbondanza. She founded Lisbon’s fashion week  – which goes by the name of “Moda Lisboa” – in the year 1991. The bi-annual fashion event wrapped its 50th edition in the first quarter of this year. Over the course of more than two decades, the fashion week’s founder has witnessed the rise of now-Victoria’s Secret Angel Sara Sampaio, the Cabral brothers, the Sampaio twins and current face of Paco Rabanne’s Pure xs fragrance Francisco Henriques.

Brazil’s São Paulo Fashion Week has successfully implemented the strategy of placing Brazil-born model powerhouses on its runways, as  a means to garner credibility in an international fashion context. A strategy, Abbondanza is all  too familiar with. “These models, with their (international) social media following, are great communication tools for Portuguese designers. It’s not always easy to get the big-name Portuguese models to return, due to their complicated schedules. That doesn’t mean they do not return however. The models develop a special relationship with Moda Lisboa, plus they enjoy spending time with family and friends while in town. So whenever they have the opportunity they come back to Lisbon – where they started their career.

According to the Moda Lisboa founder, it isn’t a lack of creativity withholding Portugal’s designers from being celebrated in ways similar to fashion week headliners from London, Paris and Milan. Greater investment in communications however, is what Abbondanza believes will elevate the international profile of local fashion creatives. “The Portuguese market is very small, therefore it is essential that local brands build strong communication strategies focused on foreign markets. This will create further opportunities for growth, and allows them to showcase and sell their designs abroad.” Miguel Vieira is amongst the Portuguese names which have recently started targeting key international markets in a more aggressive manner. Vieira has become a regular on the Milan fashion week calendar over the past couple of seasons. His peer, Patrick de Pádua, recently showcased his latest collection in Germany, as part of a stint at Berlin fashion week.

In the meantime, longtime Moda Lisboa media partner Vogue Portugal has also been doing its part in making the world take notice of the country’s fashion cred. It’s not until a recent change in art direction however, that the magazine’s creative efforts are met with rave reviews from the international fashion community. One of the magazine’s three April 2018 covers – featuring a nude portrait of models Fernando Cabral and Alba Galocha shot by photographer Branislav Simoncik – enjoyed a viral moment on social media. A remarkable feat in today’s publishing environment, when not relying on celebrity power or shock value.


“The new path of Vogue Portugal points to a more minimalist way, yet not less bold nor less profound in its printed language. Covers are now much cleaner, and we have only one cover line conveying the main message,” Sofia Lucas says. Lucas is the Editor-in-chief of Vogue Portugal and acts as the CEO and co-founder of Lighthouse Publishing – the company which publishes GQ and Vogue in the Portuguese market. The Vogue editor further comments, “What the local industry needs to (re)discover is its origin – the wealth of its traditional fashion legacy. The world, as well as most Portuguese, have no idea what this legacy is. It is with this in mind that Vogue Portugal is developing a special project to be announced shortly. I am convinced that the latter will be a benchmark in the Portuguese fashion industry at large.”

As much as media support and marketing efforts matter, no growth shall occur if none of the aforementioned leads to a financial transaction. Online retail entity Farfetch, founded by Portuguese entrepreneur José Neves could act as a key patron of Portuguese talent in terms of commerce. “As a global marketplace we endeavor to create an environment where all the best local and international fashion brands can be leveraged and celebrated globally,” Candice Fragis says, Buying and Merchandising Director of the online shopping hub which brings an international network of boutiques and fashion brands to its shoppers. The company recently launched a Shop the worldsection on the Farfetch website, highlighting designers from parts of the world which the masses may not necessarily associate with fashion. Korea, Australia and Japan are amidst countries spotlighted. Portugal however, appears to be MIA from the list. At least for now. Per Farfetch’s Buying and Merchandising Director, “We have recently launched a ‘Shop the world’ curated set for both men and women, featuring key pieces from top performing brands by country. This will continue to evolve based on our collective global supply with a view to inspire and educate our customer about the breadth of our supply. That is, globally, as well as locally.”

(AFP) Skeletons and scares at Portugal’s dinosaur park


People visit the Dino Park, an outdoor museum with more than 120 models of dinosaurs, in Lourinha. Jose Manuel Ribeiro, AFP

LOURINHA, Portugal — Eyes popping in astonishment, his mouth hanging mutely open, seven-year-old Joel approaches the four-metre-high monster and stands nose-to-nose with one of the deadliest killing machines the world has ever known.

The full-scale Tyrannosaurus rex is just one of the prehistoric highlights on display at Portugal’s self-proclaimed “dinosaur capital,” a new theme park in one of the most fossil-rich regions in Europe.

“We have 120 large-scale reproductions of 70 different species, spread over 10 hectares,” Simao Mateus, Dino Park’s scientific director told AFP.

Although only recently opened, the park sits in a part of Portugal long famous among palaeontologists for its extraordinary array of fossilised remains.

The nearby town of Lourinha, an hour’s drive north of Lisbon, has been dinosaur-mad ever since the remains of a dozen of the creatures were discovered in the late 19th century.

It already has a dinosaur museum and dinosaur statues in metal or resin can be seen on its roundabouts, while pavements are decorated with paintings of dinosaur footprints.

“Lourinha is quite particular about its dinosaurs, so we should all enjoy” the new facility, Mateus said.

Visitors to the park are greeted by the rearing neck of a giant model Supersaurus — one of the largest dinosaur genera — announcing a collection as impressive as anything else to be found in Europe.

Imported from Germany, the resin statues are dotted throughout a forest route guiding budding palaeontologists through the eons when dinosaurs stalked the Earth.

Pride of place goes to two models of dinosaurs actually discovered in the town.

Lourinhasaurus was a sauropod — an immense, four-legged herbivore similar to Brachiosaurus or Diplodocus — that roamed the rainforests of western Laurasia around 150 million years ago.

That gentle giant is not to be confused with Lourinhanosaurus, a sharp-fanged and crafty hunter the size of a crocodile that lived in roughly the same era as Lourinhasaurus.

‘Creatures from their dreams’

Mateus says interest in the park has started strong, with 175,000 visitors through the gates in the six months since opening, despite a prolonged period of poor weather.

On this visit, to the backdrop of the roars and squawks of dinosaurs of all shapes and sizes, a gaggle of young schoolchildren gape up in awe at the T-rex, its huge jaws capable of gobbling each one in a single gulp.

Other little ones cluster around a model Iguanodon — a Cretaceous-era grazer — though one boy keeps his distance from the reptile’s giant spiky thumb.

For park employee Filipa Pedro, who has been handing out stone blocks, hammers, chisels and other tools to this next generation of geologists, the experience offers children a glance of a long-lost part of the planet’s past.

“Children love dinosaurs, they are like these mysterious creatures that come from their dreams,” she says.

“Thanks to lots of cartoons and films on the subject, their knowledge is impressive. So this park is bound to please them.”

(ECO) BCP vende ao Sana Hotels edifício que ocupa quase um quarteirão na Rua do Ouro

(ECOO BCP vai sair da Rua do Ouro. Acabou de vender este edifício, que ocupa quase um quarteirão da Baixa de Lisboa, ao Sana Hotels que, assim, se prepara para abrir a quarta unidade na capital.

Os bancos estão a afastar-se do centro de Lisboa. E o BCP não é exceção. O banco ainda liderado por Nuno Amado vendeu o edifício na Rua do Ouro, que ocupa quase por inteiro um quarteirão pombalino em plena Baixa de Lisboa, ao Sana Hotels, apurou o ECO. A instituição financeira junta-se assim ao BPI e à Caixa Geral de Depósitos, que estão de saída desta zona da capital para dar lugar às cadeias de hotéis que querem aproveitar o boom do turismo em Portugal.

O banco vendeu um dos seus edifícios mais emblemáticos ao Sana Hotels, mas sem recorrer a qualquer intermediário. Ou seja, o BCP fez esta operação diretamente com a cadeia de hotéis sem a ajuda de uma consultora, uma situação que não é muito comum dada a dimensão da operação, mas que pode acontecer consoante o comprador e o vendedor, explicou um especialista do setor ao ECO. Contactado, o BCP não quis comentar. Da parte do Sana não foi possível obter um comentário até à publicação deste artigo.

Fonte: Google Maps

Trata-se de um edifício de seis pisos, com uma área total que ronda os 8.850 metros quadrados. Ocupa quase um quarteirão, com frentes para a Rua do Ouro, Rua de São Nicolau e Rua dos Sapateiros. De acordo com a consultora Worx, o preço médio do metro quadrado para os edifícios comerciais (com o propósito de serem transformados para hotelaria) na Baixa de Lisboa ronda os 5.000 euros, o que, de acordo com os cálculos do ECO, avalia esta operação entre 40 e 50 milhões de euros. Não se sabe o valor final da transação.

O BCP junta-se assim ao BPI e à Caixa Geral de Depósitos que também estão a aproveitar a forte procura para venderem os seus edifícios na Baixa de Lisboa, numa altura em que o país continua a atrair muitos turistas. O banco liderado por Pablo Forero pôs à venda no início do ano um edifício emblemático na Rua do Ouro, aproveitando “uma altura em que há mercado para edifícios destes. É claramente uma oportunidade. Há uns anos não havia tanta procura”, como explicou fonte oficial do banco ao Expresso.

Seguiu-se depois o banco estatal. A CGD também avançou para a venda de um quarteirão na mesma rua, de acordo com Expresso, com o apoio da consultora Cushman & Wakefield num negócio avaliado em 60 milhões de euros. E antes do BPI, CGD e agora BCP, também o Novo Banco vendeu a sede histórica perto do Terreiro do Paço, um edifício emblemático que está a ser transformado em 28 apartamentos de tipologias T0 e T2 e que deverá ficar terminado em 2019.

Foi esta forte procura por imobiliário que levou os investimentos no segmento a atingir o valor mais elevado de sempre. “Todos os setores, sem exceção, revelaram performancesexcelentes e todos superaram as expectativas. No investimento em imobiliário comercial, 2017 foi um ano recorde, com quase 2.000 milhões de euros transacionados”, de acordo com um estudo da consultora JLL. Ou seja, aumentaram 50% face ao ano anterior, deixando “para 2018 um pipeline robusto que antevê mais um ano muito dinâmico”.

Os bancos nacionais estão a aproveitar a forte procura pelos edifícios numa das zonas mais caras da capital. E as cadeias de hotéis são as principais interessadas nestes ativos para responderem ao boom do turismo em Portugal, com os turistas a chegarem de carro, avião ou em cruzeiros.

O Sana Hotels tem sido uma das cadeias a aproveitar esta maré. Foi em 2013 que abriu o Epic Sana Lisboa Hotel, perto do Marquês de Pombal, num investimento que rondou os 70 milhões de euros. Dois anos mais tarde, abriu as portas do Evolution Lisboa Hotel, num investimento mais reduzido (40 milhões de euros), mas não por estar numa zona menos emblemática. Foi em pleno Saldanha que apostou num conceito mais futurista e dirigido ao cliente citadino.

O edifício do BCP, agora vendido ao Sana Hotels, fica em plena Baixa de Lisboa.

Além destes dois hotéis, está ainda presente no Parque Eduardo VII, através do Sana Lisboa Hotel. E agora também na Baixa de Lisboa. Com a compra do edifício do BCP, o Sana abre o quarto hotel, cumprindo o objetivo de chegar a uma das zonas mais prestigiadas da capital: a Baixa de Lisboa.

(Economist) France’s victorious footballers do Emmanuel Macron a favour

(Economist) “Democratic heroes”, he believes, bring out the best in the French

WHEN Emmanuel Macron was a child, growing up in the northern French town of Amiens, he was a fervent supporter of a southern club, Olympique de Marseille. In 1993, the year they won the European Champions League, the club’s captain was a certain Didier Deschamps. On July 15th, under torrential rain after France’s victory at the World Cup final, it was as president that Mr Macron clasped in a tight embrace the same Mr Deschamps, captain of the French team that won the World Cup back in 1998, and now manager of the French champions.

Today France welcomes home Les Bleus, their national team, after a 4-2 defeat of Croatia in Moscow. A million people descended last night on Paris as the sun began to set, chanting, rocking Metro carriages, clambering onto bus shelters and up lamp posts, and setting off flares and firecrackers. The capital’s arteries emptied of cars and turned into a flag-waving, chanting human flow.

The team will this afternoon parade down the Champs-Elysées (past a station that the Paris Metro briefly renamed “Deschamps-Elysées”) in an open-top bus, to a reception hosted by Mr Macron at the presidential palace. They have warmed hearts and made history. Mr Deschamps has become only the third person to win the World Cup as both player and manager. Kylian Mbappé, a striker who grew up in the Paris banlieue of Bondy, is only the second teenager, after Pelé, to score a goal in the World Cup final.

Football for Mr Macron, who did not conceal his joy in the presidential box during the match, is more than just a sport. A left-back when he played as a student, he enjoys the game, and took his presidential campaign to Sarcelles, a Paris banlieue, where he kicked a ball about with youngsters. Yet football matters to him for other reasons too, and not least because, although he will doubtless be accused of exploiting victory for political ends, he may well get a poll bounce as the country’s mood lifts. In 1998 the sitting president, Jacques Chirac, saw his popularity leap from 45% in June to 59% in August after France’s victory. It remained above 50%, amid a broad economic recovery, for the next 18 months.

One reason this victory suits Mr Macron is that, at a time when the president is accused by his detractors of contempt for those less fortunate than him, and of a drift to the political right, football in France represents the sort of social mobility that he approves of. Sport, he said on a trip to Marseille during the election campaign last year, “kills house arrest” for those living in the country’s banlieues. Greater Paris, ringed by brutalist housing estates where many families of immigrant origin live, has a thriving network of after-school amateur football clubs that has become a giant talent pool for the national team. Training and talent are central to Mr Macron’s vision of how to combat poverty, and football offers a potent symbol of this.

A second reason is that the team itself has become a classy advertisement for France. In 1998 the country was still so unsure about its multicultural identity that the team was tagged “black, blanc, beur” in reference to its multiracial make-up. At the tournament in South Africa eight years ago, the French side, made up of supersized egos, went on strike during a training session, and later departed in disgrace after crashing out of the tournament. This year Mr Deschamps has forged a side of likeable team players, who were as boisterous in the dressing-room after the match as they were disciplined, focused and ruthless during the tournament. Mr Mbappé has spoken of wanting “to give everything to France”. Antoine Griezmann, another goalscorer, tweeted simply, “CHAMPIONS DU MONDE. Vive la France!”.

Mr Macron, who will have enjoyed the symbolism of victory in Russia, which he suspected of trying to hack his election campaign, has a final reason for embracing this team. This is to do with what he calls “democratic heroes”. From the president’s speech at Johnny Hallyday’s funeral, to that during the entry of Simone Veil to the Panthéon, Mr Macron regards the celebration of the lives of popular, or historic, figures as a chance to try to bring out the best in the French. Liberal democracies, he has argued, faced with the dark menace of nationalism, need heroes if they are to rouse a positive national spirit and defeat the “sad passions” fanned by populists. In the 23 players and their manager who brought home the World Cup, the luckiest man in French politics has found his heroes.

(EUobserver) IMF warns global trade war could cost $430bn

(EUobserver) The global economy could suffer a $430bn loss in GDP as a result of a trade war between the US and the rest of the world, the International Monetary Fund has warned, adding that the US itself would be “especially vulnerable”, the Guardian reported. The IMF said the new tariffs risked lowering global growth by 0.5 percent by 2020, and the US would find itself “the focus of global retaliation”.

(ECO) Um sistema ferroviário em colapso – João Cunha

(ECO) O Governo transforma, há três anos, sectores como o ferroviário nas molas de amortecimento dos exercícios orçamentais.

Dez das 18 capitais de distrito não contam com um serviço ferroviário capaz de atingir pelo menos uma velocidade média de 90 km/h. Para três delas, aliás, não há sequer serviço. O último plano de desenvolvimento da rede data de 1974, literalmente no tempo da outra senhora. Se, no longo prazo, as perspectivas são inexistentes porque os governos não assumem objectivos estratégicos, na actualidade o dia-a-dia faz-se de supressões de serviços por falta de comboios, hoje mais massivas do que em qualquer outro período da história, incluindo as faltas de carvão de 1944-45 ou quando no final dos anos 80 se cozinhava já o fecho de muitos ramais.

As oficinas de manutenção são catedrais de comboios parados e sem pessoal, com saídas a todo o vapor e sem autorização para contratações, numa compressão de meios sem paralelo que se aprofundou com o virar da página da austeridade, em 2016, condenando CP e EMEF a viverem com menos do que no período da Troika.

Apesar dos repetitivos e histriónicos anúncios governamentais, a ferrovia sobrevive hoje com menos meios do que alguma vez teve. Se em 2016 planeava alugar comboios a Espanha para fazer face ao aumento da procura que a nova postura da CP induziu nos anos anteriores, em 2018 a empresa não consegue sequer manter a oferta que tinha em 2014. 30% das carruagens Intercidades estão paradas por falta de manutenção e muitas vezes mais de 50% das automotoras diesel que a CP opera estão também paradas porque, velhas e sem investimento, sofrem uma acelerada erosão. Além disso, cerca de 50% da sua frota carece de substituição imediata e outros 50% têm esse horizonte até 2025-2030.

É hoje habitual Beja passar alguns dias sem ter sequer uma automotora à disposição ou chegar a Braga não a bordo do Pendular, mas de um comboio regional sem qualquer conforto. É a face visível da pouco transparente execução orçamental deste governo, que abdicou de orçamentos rectificativos para corrigir desvios em rubricas importantes (impostos, despesas com pessoal) e recorre antes a expedientes menos controláveis para chegar ao número mágico (objectivo cuja importância não contesto, aliás).

O problema não assumido é a falta de dinheiro. Contrariamente à narrativa ensaiada, nenhum exercício orçamental pode fugir à natureza limitada dos fundos disponíveis. Incapaz de assumir escolhas difíceis nos temas preferidos dos seus parceiros parlamentares e das suas ruidosas clientelas, o Governo transforma, há 3 anos, sectores como o ferroviário nas molas de amortecimento dos exercícios orçamentais.

Sem anúncios nem pedidos de desculpa, paulatinamente, o governo gere um Ferrovias 2020 que de 2700 milhões de gordos anúncios passou a totalizar pouco mais de 1500 milhões, eliminando novas ligações e limitando objectivos de outras. Ao mesmo tempo que anuncia dotações orçamentais para pôr obra no terreno e repor o funcionamento de comboios parados nas oficinas, vai adiando a assinatura para lançar um novo concurso ou para admitir pessoal. Não são sequer cativações e cada expediente encontrado é ainda menos escrutinável e antecipável que o anterior. Na prática, a cada nova urgência corresponde maior dose de anúncios e novos adiamentos de execução.

Consegue o ministro Pedro Marques garantir que não existem avisos das estruturas do sector para a possibilidade de operação e infraestruturas colapsarem? Consegue Pedro Marques garantir que o que anuncia será por fim cumprido? Ou terá pelo menos a honestidade de sinalizar o que vai alterando e adiando?

Se a tutela não consegue poupar-nos ao espectáculo deprimente das suas acções e omissões, talvez fosse altura do primeiro-ministro assumir a pasta e reorganizar prioridades dentro do seu governo. Afinal de contas, se este é o resultado do virar de página da austeridade, o que devemos esperar quando voltarmos oficialmente a tempos de crise?

(Economist) Why Binyamin Netanyahu is fudging east European history

(Economist) Israel’s prime minister has reasons to suck up to nationalist politicians in eastern Europe, even if they revise their countries’ controversial history regarding Jews

YAD VASHEM, Israel’s national authority for research and commemoration of the Holocaust, is a staid institute, as befits its role, and usually shies away from political controversy. So a public announcement by its leading historians on July 5th, denouncing a joint statement by the prime ministers of Israel and Poland, which it said contained “grave errors and deceptions”, was highly unorthodox.

The statement had been issued a week earlier by Binyamin Netanyahu and Mateusz Morawiecki, to end a crisis in relations between the two countries caused by a new Polish law on the death camps in Poland. It had threatened fines or imprisonment for anyone who blames the Polish nation or state for their part in the Holocaust. Many historians viewed this law as an attempt by the conservative Polish government to revise history, by playing down the willing participation of many Polish citizens in the murder of 3m Polish Jews by Nazi Germany. After months of talks, the Polish government agreed to amend the law, deleting the criminal clauses. In return, Mr Netanyahu signed a statement saying that both countries “reject the actions aimed at blaming Poland or the Polish nation as a whole for the atrocities committed by the Nazis”. The statement also asserts that “the Polish government-in-exile created a mechanism of systematic help and support to Jewish people.”

The historians of Yad Vashem argue that this flies in the face of documentation and historical research which “yield a totally different picture”. Historians say the Polish government-in-exile did little to aid Poland’s Jews and that the Polish resistance, though it fought the Germans, “not only failed to help Jews, but was also not infrequently actively involved in persecuting them.” Though there had been cases of Poles saving Jews, these were “relatively rare”.

This forthright reaction from some of Israel’s most respected historians led to an unusually chastened answer by Mr Netanyahu. “I have listened to the historians’ comments,” he acknowledged. “I respect them and will give them expression.” But there was no question of his changing the joint statement with the Poles.

Mr Netanyahu’s move seems out of character. A historian’s son, he is deeply aware of the Jewish people’s past. Some complain that Mr Netanyahu has exploited the trauma of the Holocaust in his speeches, especially to warn against Iran’s nuclear programme and that he overuses the Holocaust for his political ends.

But Mr Netanyahu has a particular interest in keeping the Polish government happy. In recent years he has pursued closer ties with the central and east European members of the European Union in the hope that they will oppose the block’s support for Palestinian statehood and its members’ joint refusal to recognise Jerusalem as Israel’s capital. He also wants to weaken the EU’s commitment to abide by a deal with Iran to curtail its nuclear programme in exchange for the lifting of economic sanctions. Mr Netanyahu has identified the Visegrad Four, consisting of Poland, Hungary, the Czech Republic and Slovakia, as his main allies within the EU.

The increasingly nationalist Visegrad leaders have given Mr Netanyahu a warmer hearing than he gets in Brussels or Berlin. In July 2017 he was their guest at a Visegrad summit in Budapest.

Hungary’s prime minister, Viktor Orban, is due to arrive on his first official visit to Israel on July 18th. Leaders of the Jewish community in Hungary have repeatedly condemned the government of Mr Orban’s Fidesz party for minimising the role played by the country’s regime during the Holocaust in the deportation and murder of over half a million Hungarian Jews. More recently, it protested against the government’s virulent campaign against the financier George Soros, whose Open Society Foundation sponsors pro-democracy groups in Hungary. The campaign against Mr Soros, who is Jewish, used well-worn anti-Semitic themes, portraying him as a “global capitalist” and puppeteer, who tries to control Hungary from behind the scenes.

Israel’s leaders have generally been the first to support Jews around the world on such matters. But Mr Netanyahu has pointedly refused to condemn the attacks on Mr Soros. He seems content to let Poland and Hungary revise history as long as they serve his political purposes.

(Prospect) How economists predicted the wrong financial crisis

(ProspectIt is often said that economists failed to see a crisis coming in 2008. That is only half true

It’s not that economists didn’t see a crash coming—they just didn’t see the crash that happened. Photo: Max Pixel

As the 10th anniversary of the fall of Lehman Brothers approaches, many books on the financial crisis will be published. Few are likely to match Adam Tooze’s Crashed in scope, ambition or rigour. This is truly contemporary history—the book runs right up to the end of 2017. It is hard to think of another author who can write as authoritatively on such a wide range of subjects—from the workings of the credit default swap market to the intricacies of Italian politics and the geopolitics of Ukraine.

Tooze, an Anglo-German historian based in the US, is best known for his work on the first half of the 20th century: The Wages of Destruction (2006), a revisionist account of the Nazi economy and war effort; and 2014’s The Deluge dealt with the aftermath of the First World War, and the reshaping of the global order in the 1920s. So Crashed might, at first sight, seem like a radical departure. But the essential themes are familiar territory for him: the interactions of economics, finance and geopolitics—and how the world order is reshaped by catastrophe.

The twist is that Crashed examines the financial crisis through a new lens: a sharp focus is kept on bank balance sheets, and the (often cross-border) capital movements between them. This is less a work of contemporary macro-economic history and more a work of contemporary macro-financial history.

The global depression of the 1930s can be understood in a traditional macro-economic framework—in terms of nation states, the collapse in their willingness to invest and consume, and the knock-on effect on their national income and budgets. Many have tried to explain our crisis in the same old frame. But in truth, it was different.

The integrated global economy of the 1990s and 2000s cannot be understood by focusing on what’s going on within and between nation states; instead you need to concentrate on the macrofinancial “interlocking matrix” of bank balance sheets, and how money flows between them—often without much regard for national borders. Capital controls had, after all, ceased to operate a generation or more earlier in most of the west: Britain’s were abolished in 1979 by Margaret Thatcher.

As Tooze sees it, switching our attention to the macrofinancial carries a number of implications: finance comes to be seen not as something that grows out of the “real economy,” but rather as an independent cause of change within it. It becomes necessary to grapple with the arcane structures of banks, shadow banks and still stranger institutions in the financial system, and to recognise that it is this private system—dependent though it is on central banks—that is in charge of the world’s supply of money.

Financial flows around the world have grown out of all proportion to output, trade or anything else. The world and its banks have been woven together in a credit nexus, which had many effects, both good and ill—and also created a new potential for a great unwinding. As Tooze writes: “What the Europeans, the Americans, the Russians and the South Koreans were experiencing in 2008 and the Europeans would experience again after 2010 was an implosion in interbank credit.”

It is often said that economists failed to see a crisis coming in 2008, but this is only half true. Before 2008 there was, as Tooze shows, a rising chorus of voices warning a crisis was imminent. The problem was that they predicted the wrong crisis. Using the old macroeconomic lens, they foresaw a crisis in which the patience of creditor countries like China would suddenly snap with persistent spendthrift societies and -deficit nations, such as the US. But it turned out the crisis we got wasn’t about countries’ trading surpluses or national debts: it was about the sudden faltering of flows of purely private finance around a remarkably integrated international banking system.

The roots of the supposed crisis and the crisis we actually got in 2008 can both be traced back to the breakdown of the Bretton Woods system, which governed the global economy from the end of the Second World War until the early 1970s. Under Bretton Woods the value of the dollar, the anchor of the global monetary system, was nominally tied to gold while other currencies were pegged to the -dollar. Cross-border capital movements were severely curtailed. When the costs of maintaining that system became too high for the US, Nixon unilaterally dropped the dollar’s gold peg and the whole system fell apart. In the 1970s, for the first time in modern monetary history, no currency was limited by the need to maintain its value against a metallic standard. The result was a staggering rise in inflation, which in the UK in 1975 exceeded 25 per cent.

The eventual settlement—which in its original form was known as monetarism, and later “neoliberalism”—was to replace gold as an anchor with the “logic of discipline.” Government budgets, it was argued, should strive for balance, central banks should keep inflation low.

By the mid-1990s, policy-makers across the developed economies were heaping praise on themselves for achieving “the Great Moderation.” Growth was steady and (outside of asset and real estate prices) inflation was low.

But amid the mutual backslapping at the G-7 summits and IMF meetings, the more nervous policy wonks began to fret about what were termed “global economic imbalances.” In particular, by the mid-2000s, the US was consistently running a large trade deficit—essentially financed by dollars it could print without needing anything to back them up, for so long as it could persuade the world they were worth what they claimed to be. That sounded like an almighty hole in the supposed logic of discipline, and with the US running a widening budget deficit alongside the trade -deficit, the concern grew that the US could soon face a Wile E Coyote moment: that, like the hapless cartoon character pursuing Road Runner, the US economy had already run off the edge of the cliff but hadn’t yet realised it was no longer on solid ground. Eventually, many believed, the Chinese and other foreign investors would cease to regard bonds issued by Washington as a safe haven to invest in, and also lose confidence in the dollar as a store of value. The result would be a crash in the dollar’s value, a sharp rise in US interest rates and a large pickup in inflation.

What actually happened after 2008 was almost the polar opposite: the dollar surged, interest rates collapsed and the looming threat was not inflation, but severe deflation. Concerns before 2008 had concentrated on US public debt—but it was private debt that was the canary in the coal mine. In the early days of the crash, it was called the “subprime crisis,” because the trouble started when the markets woke up to the fact that cleverly repackaging mortgages owed by “subprime” borrowers (people who would struggle to repay) didn’t turn them into fundamentally safe assets. Before long, however, it was not a niche subprime crisis, but a “global financial crisis” and indeed a “Great Recession.” Subprime turned out to be a mere catalyst, not the underlying cause.

Sure, subprime lending in the US was important, and so too was financial innovation—if such lending practices can really be termed “innovation.” But that innovation was itself dependent on wider global forces. The 1990s had seen a series of crises in emerging markets—Mexico in 1994, Thailand, South Korea and Indonesia in 1997, Russia in 1998, Brazil in 1999 and Argentina in 2002. In each case investors had suddenly lost confidence and stampeded out, crashing asset prices and the currency’s value and leaving recession and the need for an IMF bailout in their wake.

China had no intention of being a victim of such an outcome. Its solution was to keep the value of its currency artificially low, which made its imports competitive and thereby enabled it to run big trade surpluses, through which it could acquire its own stock of foreign currency reserves—a buffer against ever needing the IMF. Between 2000 and 2009 the annual value of China’s trade surplus with the US rose to a colossal $227bn. To hold the value of the renminbi down against the value of the dollar, the Chinese authorities had to continually buy dollars and sell renminbi. In 10 years they acquired £1.19 trillion worth of financial claims on the US.

The logic of the global economy had been flipped on its head. Rather than capital flowing from rich nations to poor ones seeking a better return, poor farmers and factory workers in China were essentially financing the higher standard of living in the United States—funding their borrowing and subsidising their imports. This was vendor financing—when a sofa company, for example, lends you the money to buy its products—on a continental scale.

This was the source of what Federal Reserve Chair Alan Greenspan called his “conundrum.” In the mid 2000s, the Fed was raising interest rates as it sought to cool a growing economy and keep inflation in check. Despite more than a dozen hikes in short-term interest rates, the longer-term interest rates the government can borrow at—which, in theory, should depend on the market’s expectations of the path of short-term rates—refused to budge. Such was the insatiable demand of Chinese (and other surplus countries’) foreign reserve managers for US government debt that those long-term rates remained low.

The US financial system was awash with cash, and since the rates of return on government bonds were low, that cash had to be put to work elsewhere to gain a decent return. Whereas traditional macroeconomics might emphasise bubbly demand for credit during times when the mood is good, Tooze’s perspective is more concerned with the need of the great glut of Asian savings in a globalised economy to find somewhere to go. The result was subprime mortgages.

It stepped up another gear when the credit rating agencies, those supposed guardians of prudence, gave their blessing to the complex engineering, which essentially argued that adding together lots of risky investments into one investment created a less risky end product. But that was just the twist. The basic peril of the great flood of money from China was not that this tide of cash could suddenly turn; the real peril was the mood of abandon it induced in western banks.

This story of Chinese capital flows as the root of the crisis is an excellent starting point. Crashed becomes even stronger when it adds European banks to the picture.

Subprime mortgage origination, engineering and selling-on was a profitable business in the 2000s and the Europeans wanted a piece of the action. German banks were especially keen—and not just giants like Deutsche Bank, but smaller regional German Landesbanken too. Around one third of all the riskiest mortgage backed securities was issued by British or European banks.

Traditional macroeconomic analysis tends to focus on the flow of capital from China to the US, which is the corollary of its national trade surplus. But using a macrofinancial lens—which focuses less on national borders, and more on where the money is flowing—gives a clearer view. Capital may have been flowing into the US, but its financial system was part of a much larger trans-Atlantic banking system. By 2007, European banks had claims worth $2.6 trillion on the US banking system, while US banks had claims on the Europeans worth $1.6 trillion. As Tooze writes, for all the attention given to Asian money flows into the US before 2008, “the central axis of world finance was not Asian-American but Euro-American.” The upshot is that the European banks were just as implicated as US ones.



Some Europeans might like to think of 2008 as a story of the US spreading its contagion to Europe, and of the later euro-crisis of 2010-12 as a nasty complication, but in Tooze’s view, this is totally misses the point. For the original lending boom in the eurozone was just as spectacular as in the US. And as Tooze notes, “The flow of funds around Europe, as around the global economy, was driven not by trade flows but by the business logic of bankers, who compared the cost of funding and the expected return.”

The traditional post-crisis narrative that funds flowed mainly from the industrious and thrifty “core” economies of the eurozone to the more cavalier “periphery,” obscures as much as it reveals. In reality, Europe replicates in miniature the global picture ahead of 2008: while economies were still, to a large regard, “nationalised,” finance had become “globalised.”

Tooze is scathing about how this story of irresponsible bank lending in Europe was rewritten into a story of irresponsible borrowers; and how a crisis of American-European finance was somehow refashioned into a crisis of public debt. This analysis is unlikely to win him many friends in official circles in Berlin or Brussels.

The crisis was global and so were the (partial) solutions eventually found. Tooze notes the centrality of the efforts of US central bankers in bailing out the dollar-based system, not just through electronically creating money (quantitative easing) at home, but also through the very quiet -provision of “swap lines” to other central banks. These swap lines give them direct access to dollars with which to support their own financial sectors (as he wrote about in Prospect’s August 2017 issue in “The secret history of the banking crisis”).

Crashed shines a much-needed light on this crucial global role of the dollar in the global economy. It is still absolutely central, which produces tension because it is inevitably managed—in general—not for the global good but for the benefit of the US. When the Fed is setting interest rates its primary concern is the domestic economy. They are, of course, not blind to the impact that the value of the dollar has on other countries but, in the jargon, these are regarded as the international “spillovers” of their monetary policy, which matter if they then “spillback” on to the US.

If a hike in rates, for example, was likely to hammer Mexican growth in a manner that would damage US exporters, then that will be taken into account—but only to that extent. In effect, a technocratic panel in DC is making decisions that will have a large impact on the lives of workers in countries as diverse as Mexico and Turkey. This has had, as we have seen in recent years, profound political consequences with populists and strongmen in the ascendant.

Towards the end of the book, Tooze casts his eye to the future. He wonders how Trump would have dealt with 2008. If another crisis does hit, then the US’s seeming abdication of global leadership, coupled with the eurozone’s failure to provide an alternative, may not make for a bright outcome. For the origins of the next crisis, he calls on us to look “not to America and Europe, the old hub of transatlantic globalisation, but to China and the emerging markets, where the future of the world economy will be decided.”

The closing chapters—covering Brexit, Trump, Emmanuel Macron and the 2017 German election—end abruptly with the publisher’s deadline. The Italian election earlier this year, in which populists triumphed, coupled with the new trade war started by Trump, feel like the start of the next, as yet unwritten, chapters.

Indeed, Tooze may have taken on a Sisyphean task in attempting to write a history of the crisis. As he himself notes rather chillingly, a 10-year anniversary publication on how the 1929 crash had reshaped global politics would have been published in 1939. But whatever happens next, Crashed is likely to stand the test of time as the best history of 2008 written in its immediate shadow.

Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze is published by Allen Lane, £30

(BBC) Trump-Putin summit: US seeks better ties with Russia


Media captionThe moment President Trump meets counterpart Vladimir Putin.

US President Donald Trump has said getting on with Russia is “a good thing, not a bad thing” at the start of his first summit with Vladimir Putin.

Mr Trump said he hoped for an “extraordinary relationship” as the two presidents met in Helsinki, Finland.

Earlier Mr Trump denounced his predecessors’ “stupidity” for tensions.

US-Russia relations have been strained by Moscow’s annexation of Crimea in 2014 and by claims that the Kremlin helped Mr Trump win the 2016 election.

Some US politicians had called for the summit to be cancelled after 12 Russian military intelligence agents were charged on Friday with hacking the presidential campaign of Democratic candidate Hillary Clinton.

But in his tweet, Mr Trump put the blame for the deterioration in relations with Russia on “years of US foolishness and stupidity and now, the Rigged Witch Hunt”.

In response, Russia’s foreign affairs ministry tweeted: “We agree.”

BBC diplomatic correspondent James Robbins says Mr Trump’s tweet is likely to alarm White House advisers, already nervous about the risks of giving too much ground to the Russian leader during the talks.

Many in the West have criticised Moscow for what they regard as its destabilising activities in Ukraine. The US, among others, has imposed sanctions on Russia over its annexation of Crimea.

The summit – in which the two leaders are being joined only by their interpreters – comes after a tumultuous European tour that saw Mr Trump criticise allies of the US over trade and military spending.

Media captionTrump: I have low expectations for Putin meeting

What are the main sources of tension with Russia?

Russia has been criticised in the US because of its military support for President Bashar al-Assad in Syria as well as its actions in Ukraine.

Tensions also are high as a result of accusations of Russian interference in the 2016 US election. The allegations are being investigated by Special Counsel Robert Mueller.

Mr Trump has consistently denounced the inquiry as a “witch hunt”.

The 12 Russians indicted on Friday were targeted as part of Mr Mueller’s investigation.

Helsinki protestImage copyrightREUTERS
Image captionProtesters in Finland have been urging Mr Trump to focus on human rights ahead of his visit.

Top Democrats including party chairman Tom Perez have urged Mr Trump to cancel the talks, saying Mr Putin was “not a friend of the United States”.

On the Republican side, Senator John McCain said the summit “should not move forward” unless the president “is prepared to hold Putin accountable”.

Russia denies the hacking allegations, and says it is looking forward to the talks as a vehicle for improving relations.

What is being discussed at the summit?

US National Security Adviser John Bolton has said that both sides have agreed the meeting will have no set agenda.

But he said he found it “hard to believe” Mr Putin did not know about the alleged election hacking and the subject would be mentioned.

“That’s what one of the purposes of this meeting is, so the president can see eye to eye with President Putin and ask him about it,” he told ABC News.

A sentence reading The Whole World is Watching is projected on the presidential palace on the eve of a summit between US President Donald Trump and Russian President Vladimir Putin in Helsinki on July 15, 2018Image copyrightAFP
Image captionThe two leaders will meet at the presidential palace in Helsinki

Mr Trump has also been urged to raise the poisoning of two people in the UKwho came into contact with the nerve agent Novichok on 30 June. Investigators believe the incident is linked to the poisoning of a former Russian spy and his daughter in March.

Mr Trump elaborated on what would be discussed at the summit during a joint press conference with UK Prime Minister Theresa May last week.

“We’ll be talking about Syria,” he said. “We’ll be talking about other parts of the Middle East. I will be talking about nuclear proliferation.”

Why Helsinki?

This is not the first time US and Russian leaders have met in Helsinki.

Finland remained politically and militarily neutral after World War Two, as US and Soviet Union went headlong into the Cold War, making it an attractive meeting spot for the two superpowers.

The city saw the signing of the 1975 Helsinki Accords, which are credited for improving relations between the Soviet Union and Western countries.

Helsinki remained a destination in the post-Soviet era, and the Trump-Putin summit is the fourth such meeting in the city.

What has Mr Trump been doing so far in Europe?

His tour has included a Nato summit in Belgium and a visit to the UK. Neither passed without controversy.

Following the Nato summit, Mr Trump said the allies had pledged to “substantially” raise their defence budgets but other leaders cast doubt on this claim.

The UK visit also had its ups and downs after Mr Trump told a newspaper the US would probably not give the UK a trade deal under the terms of Mrs May’s Brexit plans – and then later appeared to backtrack on this position.

He also said Europe was “losing its character” because of immigration from Africa and the Middle East.

On Sunday, just before he departed for Helsinki, Mr Trump described the European Union as a foe on trade.

He told CBS News that European countries were taking advantage of the US and not paying their Nato bills.

(CNN) Foreign investment in the United States plunged 32% in 2017

(CNNThe amount of money coming into American companies from overseas fell 32% last year.

Foreign investors spent $259.6 billion to acquire, launch, and expand businesses in the United States in 2017, according to numbers released Wednesday by the US Bureau of Economic Analysis. That’s down from an historic high of $439.5 billion in 2015.

The largest chunk of last year’s foreign direct investment came from Canada ($66.2 billion), followed by the United Kingdom and Japan.

Foreign direct investment is influenced by a number of factors. A strong US dollar can make American assets more attractive. That may have partially driven a spike in foreign investment over the past two years.

Financial instability abroad also makes the United States’ relatively safe markets seem like a good bet, although America’s share of global foreign direct investment has declined over the years as developing countries have become more competitive.

The United States wasn’t the only country to receive less money from outside its borders last year. According tothe Organization for Economic Cooperation and Development, global foreign direct investment flows were down 18% in 2017 from the previous year and nearly 24% from its post-recession high in 2015, which the OECD attributed to a surge in financial and corporate restructuring.

Big businesses tend to support foreign investment in US companies, saying that the money supports expansion, research and development, and employment of U.S. residents.

The Trump administration has had a more mixed outlook.

President Donald Trump has celebrated foreign business activities in the United States, including the Chinese company Foxconn’s construction of a factory in Wisconsin. But the White House also blocked Singaporean chipmaker Broadcom’s acquisition of California-based Qualcomm, citing concerns that American technology could end up in the hands of China.

Trump has backed a bill pending in Congress that would expand the powers of the Committee on Foreign Investment in the United States, which reviews such transactions.

Trade adviser Peter Navarro, meanwhile, has characterized foreign investment as “conquest by purchase.”

“In the long run, we are likely to be owned by foreigners,” he said last year.

Nancy McLernon, president of a trade group of multinational companies called the Organization for International Investment, thinks that attitude — along with Brexit in the U.K. — took a toll on investment.

“Last year, there was a lot of uncertainty,” McLernon says. “Multinational companies in general are concerned about how governments will be treating foreign companies operating in their countries. Cross-border acquisition is not surprisingly taking a hit from economic nationalism, not just in the U.S. but also worldwide”

(DML) My deal is the only Brexit deal – wreck it at your peril: THERESA MAY’s steely warning to Tory rebels AND those bully boys from Brussels

(DML) Our Brexit deal for Britain seizes the moment to deliver the democratic decision of the British people and secure a bright new future for our country outside the European Union.

It restores our national sovereignty, so that it is our Government that decides who comes into our country, our Parliaments that make our laws and our courts that enforce them.

It puts an end to the vast membership subscriptions we pay to Brussels, delivering a Brexit dividend to support domestic priorities like our long-term plan for the NHS.

It grasps the opportunities of an independent trade policy, freeing us to forge new trade deals with allies across the world – including America, where President Trumphas made it clear he wants a trade deal and is now confident we will be able to do it.

And it enables us to build the new economic and security partnerships we want to see with the European Union. Because Brexit isn’t about trading with other countries instead of trading with Europe, it is about doing both.

Theresa May said: 'This is the scale of the opportunity before us and my message to the country this weekend is simple: we need to keep our eyes on the prize. If we don¿t, we risk ending up with no Brexit at all'

Theresa May said: ‘This is the scale of the opportunity before us and my message to the country this weekend is simple: we need to keep our eyes on the prize. If we don’t, we risk ending up with no Brexit at all’

This is the scale of the opportunity before us and my message to the country this weekend is simple: we need to keep our eyes on the prize.

If we don’t, we risk ending up with no Brexit at all.

This is a time to be practical and pragmatic – backing our plan to get Britain out of the European Union on March 29 next year and delivering for the British people.

I know there are some who have concerns about the ‘common rule book’ for goods and the customs arrangements which we have proposed will underpin the new UK-EU free trade area.

I understand those concerns. But the legacy of Brexit cannot be a hard border between Northern Ireland and Ireland that unpicks the historic Belfast Agreement. It cannot be the breaking up of our precious United Kingdom with a border down the Irish Sea. And it cannot be the destruction of integrated supply chains and just-in-time processes on which jobs and livelihoods depend.

This means we have to have friction-free movement of goods, avoiding the need for customs and regulatory checks between the UK and the EU.

And this cannot happen if products have to go through different tests for different markets, or if customs declarations have to be made at the UK/EU border.

I am yet to see a workable alternative future trading arrangement that would deliver on our commitments to Northern Ireland, preserve the constitutional integrity of the UK and deliver on the result of the referendum.

But our Brexit deal for Britain achieves exactly this – and it can work. For the common rule book only covers industrial goods and agricultural products and only those rules which are necessary to ensure free flow at the border. The regulations that are covered are largely stable and supported by a large share of our manufacturing businesses. And there will always be a parliamentary lock to ensure that our Parliament has the sovereign ability to reject any new law or regulation, while recognising there would be proportionate implications for the operation of the future relationship, were they to do so.

So I believe we need to come together behind our plan.

As the Trade Bill returns to the Commons this week, there are some planning to vote for amendments that would tie us to a permanent customs union with the EU.

This would be the ultimate betrayal of the Brexit vote. It would remove our ability to have an independent trade policy at all, conceding Britain’s role on the global stage as a force for free trade and endangering people’s jobs and livelihoods. This Government will never stand for that.

There are others who are planning to try and bring down a Bill that is essential in enabling us to prepare for life outside the European Union. This would put at risk our ability to make the necessary preparations for a no deal.

And this could lead to a damaging and disorderly Brexit because without this Bill passing we would not be able to retain the benefits of more than 40 existing trade arrangements; and neither will we have the means to protect consumers, industries and workers from being undercut by unfairly traded goods in a post-Brexit Britain.

She added: 'The legacy of Brexit cannot be a hard border between Northern Ireland and Ireland that unpicks the historic Belfast Agreement. It cannot be the breaking up of our precious United Kingdom with a border down the Irish Sea'

She added: ‘The legacy of Brexit cannot be a hard border between Northern Ireland and Ireland that unpicks the historic Belfast Agreement. It cannot be the breaking up of our precious United Kingdom with a border down the Irish Sea’

As I have said many times, we can get a good deal and that is what is best for Britain. But we should also prepare for no deal. Not to do so would be grossly irresponsible. So I urge Parliamentarians on all sides to consider this when they are voting.

Finally, some people have asked whether our Brexit deal is just a starting point from which we will regress. So let me be clear. Our Brexit deal is not some long wish-list from which negotiators get to pick and choose. It is a complete plan with a set of outcomes that are non-negotiable.

People voted to end free movement. So free movement will end. People voted to end the jurisdiction of the European Court of Justice in our country; and we are going to deliver that too.

We will leave the Single Market and customs union, and get out of the Common Agricultural Policy and the Common Fisheries Policy. We will have that independent trade policy and a new UK-EU free trade area with a common rulebook for industrial goods and agricultural products.

We will maintain high standards in keeping with our values, so we continue to promote open and fair trade. We will have that parliamentary lock on all new rules and regulations. We will not tolerate a hard border between Northern Ireland and Ireland or between Great Britain and Northern Ireland.

And we will maintain close co-operation with the EU on security to keep our people safe while ensuring we have our own independent foreign and trade policy. None of these things is up for debate.

So the negotiations with the European Union are not going to be easy for Brussels – and I don’t intend them to be. As President Trump has said, I’m a tough negotiator. And just as I made clear to him on Friday – I say to the British people today: I am not going to Brussels to compromise our national interest; I am going to fight for it. I am going to fight for our Brexit deal – because it is the right deal for Britain.

(EurActiv) China set to fully control Portugal’s power grid amid Europe’s inertia


The case could be a game changer when it comes to foreign investments in the EU, considering that currently the Commission lacks the proper legal framework to “protect”EU common interests. [Chiu Ho-yang/Flickr]

China is set to make further inroads into European infrastructure, as a state-owned company attempts to gain full control of Portugal’s power grid.

The case could be a game changer when it comes to third country foreign investments in the EU. Currently, the Commission lacks the proper legal framework to “protect” EU common interests and it could be a wake-up call to speed up the procedure to establish an investments screening mechanism.

In 2011, Portugal’s government was required to sell its stake in the country’s power grids as part of the terms of its €78 billion bailout programme, organised by the European Commission and International Monetary Fund.

China Three Gorges (CTG) quickly snapped up the 21.35% share of Energias de Portugal (EDP) for €2.7 billion but reportedly committed in 2012 to remaining a minority shareholder.

EURACTIV was informed that the CTG purchase was not notified to the European Commission and, as such, no assessment was carried out.

But the company is now pursuing a majority stake in EDP that, combined with shares owned by other state-owned enterprises (SOEs), would give China near full control of an EU country’s power system.

EU mechanism to veto foreign investment ‘not on the cards’

EU leaders will discuss on Friday options to “screen” foreign investment in strategic sectors, but a more far-reaching proposal that would allow blocking takeovers at EU level remains off the table for now.

EDP is also a big player in renewable energy, as it is the majority owner of EDP Renewables, the world’s fourth largest wind energy producer, which aligns with China’s own impressive forays into clean energy.

CTG, which boasts one of the world’s largest dams among its assets, has already tabled an offer for the EDPR shares not controlled by EDP, meaning if its offer for the parent company is accepted, it would control both entities.

EDP is currently considering a third offer that sources say is in excess of €10 billion. The Portuguese government does not oppose the sale.

If accepted, China would control the generation and distribution of Portugal’s power, as well as holding 25% of the management company that runs both the electricity and gas grids, Redes Energéticas Nacionais (REN), which is also held through a separate SOE.

The Portuguese case comes at a portentous time for the EU, which is currently trying to broker an agreement between the Commission, Council and Parliament on investment screening, after France, Germany and Italy asked the EU executive to act in February 2017.

Many European economies are concerned that if large-scale investments by third parties like China are not controlled, assets could be “looted”, according to French Finance Minister Bruno Le Maire.

Chinese SOEs already control significant stakes in the Italian power grids, British gas network and Greece’s grid operator. The Port of Piraeus is also partly controlled by another state-run outfit.

A source close to the issue told EURACTIV that China’s “discretion” was getting dangerous. “They are patient. In most cases, they buy initially a small share with an aim to increase it in the long run,” the source said.

A first round of trilateral talks on investment screening kicked off on 10 July and EU trade boss Cecilia Malmström hopes for a final deal on the “priority file” before the end of the year.

Cecilia Malmström


First Trilogue meeting with @EU2018AT and @EP_Trade on investment screening. Agreement that this is a priority file. We will do everything possible to finish this by the end of the year. @berndlange

When amending the Commission’s proposal, which was published last September, the Parliament decided that if one-third of EU member states judge that an investment screening process affects their interests, their views must be taken into account by the country in question.

In Portugal’s case, it is unlikely that other member states would trigger that option, given the isolated nature of the Iberian peninsula from the rest of Europe.


Portugal breaks 100% renewables mark but remains isolated

Portugal produced more power from clean energy sources in March than it actually needed, marking the first time in the 21st century that renewables have topped 100% of its production. But a dearth of energy connections with the rest of Europe remains problematic.

EURACTIV understands that Italy, Germany and France are pushing for an investment screening deal while some Visegrad countries, the UK, Croatia and Cyprus have expressed reservations.

Hungary’s Permanent Representation to the EU was asked to comment on the case but it declined to do so.

Under Commission scrutiny

Under its current investment policy instruments, the Commission does not assess individual FDI cases.

In a statement recently, Commissioner Malmström said that in its FDI proposal, the EU executive did not establish a country-by-country list of strategic sectors, but seeks to establish a coordination framework under which member states and the Commission may provide comments and opinions on FDI likely to affect security or public order.

EURACTIV asked about the role of the Commission, as coordinator of the bailout programmes, when it comes to privatisation of critical assets. Particularly, it asked whether the wider long-term political implications for the EU as a whole are considered when EU countries under bailout are forced to sell critical assets such as in the energy sector.

A source said that from a programme perspective, the primary interest of privatisations – apart from improving the performance of SOEs and in this way reducing fiscal risks – was to reduce the financing needs of the state and to improve debt sustainability.

To the extent that relevant EU law was respected, programme partners did not have a mandate or the capacity to look into all the terms of privatisation procedures implemented during the programme period, the source explained.

As for the strategy to purchase a small number of shares and then expand gradually to full takeover, the same source noted that the Commission had to approve acquisitions of control under the EU merger regulation when the companies involved meet certain thresholds.

“Those thresholds are based on the turnover of the companies involved and ensure that only deals of a certain size have to be notified and approved. The requirement to obtain Commission approval applies regardless of the sector and regardless of the nationality of the acquirer. It therefore also applies to acquisitions by Chinese SOEs in the energy sector,” the source said.

The same source added that although acquisitions of control had to be approved, acquisitions of a non-controlling stake in a company do not have to be notified and approved to the Commission.

“However, this does not mean the EU Merger Regulation can be circumvented by acquiring a company gradually, through purchases of a small number of shares.”

If a company first acquires a non-controlling stake and then later increases its stake to a level where it can exercise control, the acquisition of the additional stake will trigger a review under the EU Merger Regulation. This also applies to Chinese SOEs.”

“In other words, if a Chinese SOE were to first acquire a non-controlling stake, this would not be notifiable. But as soon as the stake is increased to a level where the Chinese SOE acquires control, the acquisition would have to be notified and approved by the Commission,” the source concluded.

What the EU Parliament says

On 20 March 2017, ten MEPs from the European Peoples’ Party (EPP) put forward a proposal for a Union act on the Screening of Foreign Investment in Strategic Sectors.

Swedish MEP Christofer Fjellner (EPP) told EURACTIV that electricity and gas infrastructure had to be considered critical EU infrastructure, and it ought to be protected by the investment screening mechanism.

“I think the issue should be addressed at the upcoming EU-China Summit. However, I believe that a much bigger problem is Gazprom, Nord Stream and the dependence of Russian gas,” he added.

For Portuguese MEP Marisa Matias from GUE-NGL, there is no argument that European stockholders are better than Chinese ones.

She added that the government does not make its position clear regarding the issue but explained that it does not want to make it public again.

“The Portuguese state owns no stock in EDP. The company was completely privatised and has no public capital and very few Portuguese (or European) institutional stockholders. 35% of the stock was dispersed which makes it very easy for the Chinese to achieve a dominant position,” she said.

According to Matias, the company has always been a very profitable, even when it was public but prices have soared since it was privatised.

“Our proposal (Bloco de Esquerda) is to nationalise the company. We have also been making proposals to end various rentist conditions that EDP benefits from, at the expense of taxpayers and consumers,” she concluded.