Monday, 5 December 2016

From Italy and Brexit to Trump, don’t blame every electoral upset on “populism”

In a world characterised by steadily decreasing attention spans and rampantly rising information onslaughts, the temptation to simplify just to keep on top of the newsflow is immense.

Monday 5 December 2016 3:45pm
Gemma Acton
Gemma Acton is a CNBC correspondent.

Matteo Renzi At The Democratic Party PD National Assembly
Matteo Renzi has resigned after losing a constitutional reform referendum (Source: Getty)

The risk, of course, being that critical nuances are disregarded and inaccurate conclusions are drawn before being flung around on social media and becoming alleged “fact” in a post-truth society.
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So it goes with the bucketing of the series of high profile upsets to the political status quo this year into an allegedly uniform set of “populist” votes.
The danger with this boiled-down view is that those – such as France’s far-right presidential candidate Marine Le Pen or Germany’s far-right Alternative fur Deutschland (AfD) party – who would benefit from such a narrative being true can run with this story, helping develop its momentum into an inexorable tide.
So as we look ahead to a series of political events in 2017 which will be critical to determining the direction of the European project in years to come, it is imperative that we all – as reporters and as readers – take responsibility for trying to understand what political outcomes actually reveal.
French Far Right Party 'Front National' May Day Demonstration In Paris
Marine Le Pen would dearly love a rising "populist" tide to lift her own electoral chances (Source: Getty)
What’s clear from the Brexit result, Trump’s victory and the No vote in the Italian referendum is that there are swathes of the world who feel they have been left behind by an elite in the multi-decade scramble for globalisation and technological advancement. It is also clear that distrust of and disillusionment with the so-called elite is elevated both within certain countries and on a wider cross-border level, as represented by gatherings such as the annual World Economic Forum meet in Davos.
So yes – there is a common element to these events which needs to be taken seriously. But let’s not forget the individual nuances which discredit attempts by opposition parties to profess that “populism” is coming to a town near you soon.
To take a live example, if you believe the Italian No vote and Brexit vote share populist similarities, take a look at the age cohort breakdown. While 71 per cent of those aged 18 to 24 voted Remain in the UK (ie for the status quo), according to YouGov, in Italy the result was flipped, with only 19 per cent of Italians aged 18 to 34, according to QUORUM, voting Yes. Enthusiasm for Remain fell at every higher age bracket, but in Italy the exact opposite was true.
BRITAIN-EU-POLITICS-BREXIT-DEMO
Younger Britons tended to back Remain (Source: Getty)
While there are a multitude of influences on voters, if we start with the premise each person chose the option which they saw as better for their own futures, what this indicates is that the majority of voting youth in the UK believed the opportunities offered by the status quo were more compelling than the alternative. Turning to Italy, youth overwhelmingly preferred to take their chances on heightened political and economic uncertainty compared to the existing situation.
Considering Italy’s current youth unemployment rate of 37.1 per cent versus the UK’s 13 per cent, or the around 5 per cent growth in Italy’s real GDP since the introduction of the euro in 1999 versus the UK’s near 40 per cent, this result starts to make sense.
Add in a host of other factors, such as a still malfunctioning labour market (despite attempted reforms) and decades of widespread political corruption, and the promise of the unknown for Italian youth grows in appeal.
While delving into the specifics of the messages from each key political outcome in 2016 will take far more space than this publication has kindly granted me, I hope the overall point is clear.
Let us do voting majorities the service of taking time to understand their individual concerns, grievances and aspirations rather than trying to conflate a multitude of unique issues into one conveniently digestible “populism!” soundbite.

House prices are already shooting up along the Elizabeth line

Property prices along the much-anticipated Elizabeth line - formerly known as Crossrail - are already shooting up.

Monday 5 December 2016 11:06am
Helen Cahill

The Queen Visits The Crossrail Station Site At Bond Street
The line has been named after the Queen (Source: Getty
Property prices along the much-anticipated Elizabeth line - formerly known as Crossrail - are already shooting up.
Average house prices near the stations along the route have up gone up by 22 per cent over the last two years, according to research by Lloyds Bank, even though the line won't be fully-functioning until the end of 2019.
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House price growth in the surrounding areas along the line has averaged 14 per cent during the period.
The change has been particularly striking in Abbey Wood, and Forest Gate, where prices have increased by 47 per cent and 46 per cent respectively.
This has brought the average house price in Abbey Wood up by £91,712 in the last two years. As of August this year, the average price for the area was £288,789.
The most expensive area on the line was Paddington, the only place where the average house price was above £1m.
Andrew Mason, Lloyds Bank mortgage products director, said: "Crossrail promises to connect towns in Berkshire and Buckinghamshire to Essex and south-east London, via the centre of the capital, by offering a frequent and fast service which will integrate with the existing Underground network.
"This will clearly prove attractive to many commuters, as the new service will make it much easier to reach ket destinations such as the City of London, Canary Wharf and Heathrow Airport."

http://www.cityam.com/254917/house-prices-already-shooting-up-along-elizabeth-line

Building more homes will not solve London's housing crisis - here's why

Let's be clear, the housing crisis is not a crisis just because there is a shortage in housing. It's a crisis because there is a real problem with our access to affordable housing and not enough is being done about it.

Monday 5 December 2016 8:00am
Simon Finneran

BRITAIN-CONSTRUCTION
Luxury flats won't solve the housing crisis (Source: Getty)

London homes are the second most over-priced in the world, according to a recent report by UBS Wealth Management. UBS puts London closely behind Vancouver in its “bubble risk rating” due to house prices having risen by 25 per cent since the end of 2014. What this means is London has the second most over-priced property market. This is mainly the result of foreign investment and low interest rates which are not consistent with the performance of the real economy.
London's housing bubble is also the second-least affordable in the world after Hong-Kong when taking into account increasing house prices and average earnings, according to the Swiss Bank report. The question is: what can be done about it?
If there was one solution to the housing crisis, it would be well underway. The city's biggest problem stems from a variety of causes: a lack of space, overcrowding, financial strain, cost of living, foreign investment, interest rates, housing associations… the list goes on. Building new homes will not solve the capital's issue because those homes will still not be accessible by most Londoners.
We need to look at a number of short-term alternative solutions.

Affordable living

We all know the score. Developers make more money selling high-value properties to foreign investors than they do in championing cheaper housing. But we need affordable options, and fast.
The city is welcoming innovative solutions to offer prefabricated affordable housing. Recent examples include YMCA's Y:Cube - modular flats built in South London. These micro homes cost around £45,000 for a one-bedroom apartment. Container City in the Docklands offer reconstructed shipping containers at 65 per cent of the market rate, around £145 a week.
Micro-housing is far from new and has the potential to provide real access for people to the city, but such solutions face problems of planning permission and land purchasing or leasing. Whilst the enclosures themselves may be cost-effective to build, land in London is at a premium, saddled upon the homebuyer.

Building on Green Belt and Brownfield sites

We need to find ways to build affordable housing by re-engaging with the value of land in our city.
Housing authorities need to relinquish the 70-year old law protecting green belt land within the M25, that currently acts as a safe zone for agriculture and greenery. Coupled with building on brownfield sites - land previously used for industrial or commercial purposes - our country could go a long way in creating two and a half million homes, which would vacate space and invade less than 0.5 per cent of English soil.

Bringing empty properties back into use

According to the Empty Homes charity, more than 50,000 properties sit empty in London. We need to find ways to bring the high number of empty properties back into circulation.
For example, local authorities can take more ownership of these properties gathering dust and use them for housing or rental purposes, even if it's through applying pressure on the government to deregulate and soften housing laws. The Empty Homes Premium, which gives councils the ability to charge home owners 50 per cent more council tax if they leave properties empty for two or more years, has not been enforced enough.
Many young professionals are discovering new ways of living by utilising vacated properties. An example is the Property Guardianship scheme, which takes a vacant building and places a "guardian" into it. The vacant building can include anything from ex schools, care homes and pubs to empty flats. And the person living there can pay as little as £350 per month for a central London location.
The issue of the housing crisis is so complex and entwined in every part of society that we need to look at options that rebuild new properties, inhabit current ones, empower housing authorities, regulate interest rates and foreign investments and develop ergonomic mobile homes on available land. Only then can we begin to be proud of our city's housing structure once again.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.
http://www.cityam.com/250002/building-more-homes-not-solve-londons-housing-crisis-heres

Saudi Arabia has surrendered control of the global oil market to US shale

The new Opec deal to cut oil output – the cartel’s first since 2008 – amounts to nothing less than Saudi Arabia’s surrender to the power of American shale.

Monday 5 December 2016 4:59am
John Hulsman

It has come about due to Riyadh’s belated, horrified understanding that it has utterly lost control over the energy market, running through its capital reserves in the process. Rather than young, feckless Deputy Crown Prince Mohammed bin Salman using Saudi Arabia’s John D Rockefeller strategy to permanently drive US shale out of the energy market, the exact opposite result has occurred. Unwittingly, the Saudis have made the Americans the new global energy swing producer, the permanent ceiling for the global price of oil.
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This, in its way, is as momentous a shift in global power as the stunning recent Brexit and Donald Trump votes. Whereas Brexit showed Europe to be in absolute decline, while the election of Trump brings to an abrupt end 70 years of the US as the global ordering power, the Saudi’s meek surrender brings to a close the long age of Opec domination of the world’s energy market. This year truly has seen the death of one world order, along with the uncertain birth of another.
The details of the new Opec pact make it clear that even this belated effort to quell the self-imposed bleeding brought on by Saudi attempts to drive US shale out of the energy market – by, in Rockefeller style, over-producing to drive down prices and eradicate their competitors – is problematic at best.
Opec as a whole agreed to cut 1.2m barrels per day (bpd) from production from the beginning of the new year, with the Saudis themselves bearing the brunt of the cuts with a personal reduction agreed to at just under 500,000 bpd. But as Opec now accounts for less than half of all energy output in the world, it is a very weakened cartel, dependent on the kindness of strangers to survive.
SAUDI-ARAB-LATAM-SUMMIT
Saudi's gormless deputy crown prince (Source: Getty)
Externally, this means Russia. The new global energy reality has been forthrightly addressed in the accord, as the interim deal is contingent on securing a further 600,000 bpd in cuts from non-Opec members, with Russia expected to contribute 300,000 bpd to this total.
Unsurprisingly, the Kremlin is less than enthused, as Russian oil minister Alexander Novak blandly said that at best his country would only cut its production gradually, due to “technical problems”. Opec isn’t much of a cartel if it is utterly dependent on major (and generally unwilling) outside players such as Russia to make its internal agreements work.
While the Saudis are hoping to persuade the Russians to go along with their fragile deal, to reach even this stage meant Riyadh wholly giving way to their hated enemy within the cartel, Iran.
Just recovering from years of sanctions due to its nuclear programme, all this past year as the Saudis have frantically tried to reach an Opec-wide deal to cut their ruinous losses, Iran has held firm that it has no intention of hurting its just unbound economy to take one for the team. In the end, the Saudis had to meekly acquiesce, allowing Iran to continue to ramp up production, helping their sworn enemy in a way that must have put the House of Saud’s teeth on edge.
So even after surrendering to Iran, and assuming the Russians can be generally corralled to accept cuts of their own, there is a final problem with the Saudi inspired Opec accord. The cuts are estimated to leave global oil production at 32.5m bpd, a historically high rate of supply unlikely to lead to much of a rise in the price of energy at all.
Iran's supreme leader Ayatollah Ali Kham
The Saudis have given in to their hated enemy, Iran (Source: Getty)
Even should prices sustainably drift upwards, all this will do is make American shale – far more price sensitive and far more capable of being quickly brought on line than the fixed rigs of the Opec member countries – turn the spigots back on, with its production rising and the price consequently falling.
The Saudis, having utterly lost the plot, are now – as the problems inherent in this deal make all too clear – trapped in a world where they no longer control the global energy scene. It seems even the surrender terms the Opec deal represents will not be accepted by Riyadh’s competitors. And they have no one to blame for this state of affairs but themselves.
Along with Europe as a great power, and America as the world’s ordering power, the myth of Saudi energy dominance is the third great dinosaur to be felled by the asteroid that is 2016.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.
http://www.cityam.com/254921/saudi-arabia-has-surrendered-control-global-oil-market-us

Italy's Renzi announces resignation after referendum rout

ROME (Reuters) - Italian Prime Minister Matteo Renzi said he would resign after suffering a crushing defeat on Sunday in a referendum on constitutional reform, tipping the euro zone's third-largest economy into political turmoil.
 Reuters International DEC 5, 2016 - 03:09
By Crispian Balmer and Gavin Jones
Italian Prime Minister Matteo Renzi speaks during a media conference after a referendum on constitutional reform at Chigi palace in Rome, Italy, December 5, 2016. REUTERS/Tony Gentile
His decision to quit after just two and a half years in office deals a blow to the European Union, already reeling from multiple crises and struggling to overcome anti-establishment forces that have battered the Western world this year.
The euro fell to 20-month lows against the dollar, with markets worried that instability in heavily indebted Italy could reignite a dormant financial crisis and deal a hammer blow to the country's fragile banking sector.
Renzi's resignation could open the door to early elections next year and to the possibility of an anti-euro party, the opposition 5-Star Movement, gaining power in the heart of the single currency. 5-Star campaigned hard for the 'No' vote.
"I take full responsibility for the defeat," Renzi said in a televised address to the nation, adding that he would hand in his formal resignation to President Sergio Mattarella on Monday.
"I will greet my successor with a smile and a hug, whoever it might be," he said, struggling to contain his emotions when he thanked his wife and children for their support.
"We are not robots," he said at one point.
Mattarella will consult with party leaders before naming a new prime minister -- the fourth successive head of government to be appointed without an electoral mandate, a fact that underscores the fragility of Italy's political system.
Renzi won a little over 40 percent of the vote in Sunday's referendum, a far worse result than polls had predicted. It ended months of campaigning for a reform that he said would have brought political stability to Italy but that opponents said jeopardised democratic checks and balances.
The new prime minister, who will need the backing of Renzi's Democratic Party (PD) to take office, will have to draw up a new electoral law, with the 5-Star urging a swift deal to open the way for elections in early 2017, a year ahead of schedule.
"From tomorrow, we will start work on putting together 5-Star's future programme and the team of people that will make up a future government," said Luigi Di Maio, who is tipped to be the group's prime ministerial candidate.
Opinion polls show the PD is neck-and-neck with 5-Star, which wants to hold a referendum on membership of the euro.
Italy's bond market could face fresh turbulence on Monday, with investors seeking a premium to hold Italian debt in a time of uncertainty. The nation's banks, which have lost almost half their value on the Milan bourse this year, might also be hit.
DEMOLITION MAN
Renzi, 41, took office in 2014 promising to shake up hidebound Italy and presenting himself as an anti-establishment "demolition man" determined to crash through a smothering bureaucracy and redraw the nation's creaking institutions.
Sunday's referendum, designed to hasten the legislative process by reducing the powers of the upper house Senate and regional authorities, was to have been his crowning achievement.
However, his reforms so far have made little impact, and the 5-Star Movement has claimed the anti-establishment banner, tapping into a populist mood that saw Britons vote to leave the European Union and Americans elect Donald Trump president.
In one relief for mainstream Europe, Austrian voters roundly rejected on Sunday a candidate vying to become the first freely elected far-right head of state in Europe since World War Two, choosing instead a Greens leader as president.
But elsewhere the old-established order is in retreat. French President Francois Hollande announced last week he would not seek re-election next year and even German Chancellor Angela Merkel looks vulnerable as she seeks a fourth term in 2017.
The biggest immediate loser from the 'No' triumph in Italy could be Italy's third-largest bank, Monte dei Paschi di Siena, which is bowed by bad loans and is looking to raise 5 billion euros ($5.3 billion) this month to stave off collapse.
A consortium of investment banks willing to underwrite the cash call will meet Monte dei Paschi's management on Monday to decide whether to go ahead as planned, a source close to the matter said on Friday.
Investors are likely to shun the operation if political chaos prevails, meaning a state intervention will be needed to save it. Several other lenders also need a cash injection to stay afloat, raising fears of a domino effect.
Economy Minister Pier Carlo Padoan, seen as a possible candidate to replace Renzi, sought to calm nervous markets on Friday, saying there was "no risk of a financial earthquake" if 'No' wins, though there may be "48 hours of turbulence".
http://www.swissinfo.ch/eng/italy-s-renzi-announces-resignation-after-referendum-rout/42727386