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Ignore the Hype, China’s Leaders Cannot Re-Shape Economic Reality – Forbes

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While worries about Evergrande seem to have quieted, none of this means there’s nothing to learn from what happened. The Chinese real-estate giant is a useful reminder of how politicians and bureaucrats have no ability to prop up or grow any economy. None at all.

This is worth bringing up as news out of Beijing signals alleged economic support from China’s leadership. In a recent front page piece (“Beijing Moves to Cushion Economy As Risks Worsen”) at the Wall Street Journal, Stella Yifan Xie reported that “China’s leaders” cut “two key interest rates” in “response to the impact of pandemic restrictions and a property-market slump.” At best, these machinations will achieve less than nothing. And the reasons why are obvious.

Most obvious is that market interventions don’t work. By definition. Markets aren’t political or inclined one way or the other. Markets quite simply are. They’re a reflection of what’s known in the here and now. They’re an ideology-blind verdict. Please keep this in mind with government interventions meant to “Cushion Economy As Risks Worsen.” The translation of the latter is that Beijing’s leaders will lean against the truthteller that is the market itself. The markets are signaling dismay with pandemic restrictions, and they’re similarly signaling mistakes made by investors in the allocation of capital toward property.

In which case Beijing is aiming to reshape reality. Even if it succeeds (it won’t) in overwhelming the message of the market, such a move will not enhance China’s economy. We know this because restrictions on human action are by their very name a growth depressant, and China’s leaders are trying to paper over their own freedom-limiting errors. Just as harmful would be attempts to limit the market’s message about property mis-allocations. This is the equivalent of Congress intervening in the failure that was Warren Beatty and Dustin Hoffman’s Ishtar as a spur for the stars to make Ishtar II. Massive federal support (buying tickets for empty theaters) could have theoretically created a blockbuster that was otherwise a flop, but doubling down on bad is rarely good. The movie industry is bolstered by its failures precisely because failure teaches it how to succeed. Applied to China, how will it aid the property market and the economy more broadly if bad decisions are subsidized?

To which some will say an ability to limit the pain of bad decisions is evidence that government interventions do in fact work. Precisely because government can spend in order to mitigate the pain of bad, so can it soften the blow of Evergrande’s collapse by propping up same. The latter is a very debatable presumption (see below), but the presumption only speaks to what’s visible as is.

What’s not visible is what intrepid investors could achieve if able to acquire properties or resources on the fire-sale cheap. Economic growth is a consequence of investment in frequently unknown, untested, and potentially transformative ideas, but what’s unknown, untested and potentially transformative is generally expensive. It’s risky. This is important in consideration of bailouts. They limit the potential fall in prices, thus making it more challenging for the purchasers of troubled assets to take big risks. Investors quite simply have a lot more leeway to make audacious bets if they can buy distressed market goods for .25 cents on the dollar versus .75.

Worse, all businesses and entrepreneurs eager to rush a different, more vibrant future into the present must have access to precious resources (capital) in order to take the giant steps. Except that if government is providing an alleged “cushion” for a weakening economy, it’s by definition keeping precious capital in the hands of those who’ve abused it or misused it, as opposed to those interested in treating it better.

Stated simply, bailouts are always and everywhere an economic wet blanket. It’s been said here since 2008, but eventually it will be conventional wisdom that the interventions overseen by the George W. Bush administration and the Ben Bernanke Fed didn’t avert a crisis, rather they were the crisis. Absent their naïve meddling, 2008 is presently a year instead of an adjective.

Which brings us back to Evergrande. There’s more to its story than simple debt troubles. To see why, consider the currency denomination of so much of its debt. It’s in dollars. This speaks volumes, and most crucially does about the globalization of capital. While Evergrande is based in China, it’s apparent that the financing of its business endeavors is globalized.

On its own the above is a positive statement of the growing interconnectedness of the world economy, but it also speaks to the folly of “Beijing” attempting to cushion China’s economy. Good luck.

Indeed, assuming China’s economy is really contracting, rest assured that global capital intermediaries will pull from China’s commercial sector much more capital than Beijing can add. There’s no stimulus to speak of here. Money goes where it’s treated well, and if the markets have decided that Chinese producers are overextended, no amount of meddling by Chinese bureaucrats will alter this truth. All the leadership can do is slow economic growth by subsidizing what market actors will not.

Conversely, assuming the markets are wrong about growth prospects in China, rest assured that globalized financiers will know this far sooner than the high functionaries in Beijing. Put more simply, if there’s abundant potential for progress in China, copious funds from around the world will be there to finance it. Government cannot make great what isn’t.

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Minister Of The Economy Franz Fayot On Luxembourg’s Transition Towards A Green Economy – Forbes

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Just last week, Luxembourg’s Minister of the Economy, Franz Fayot, came to the cities of Toronto and Montreal as part of an economic mission organized by the Luxembourg Chamber of Commerce in close cooperation with the Ministry of the Economy. I had the opportunity to sit down with Minister Fayot at the InterContinental Toronto Centre, and get some insights into the Grand-Duchy’s economic transition towards sustainability.

A transitioning economy

With up to one-third of its GDP related to the finance sector, Luxembourg’s economy is widely dominated by the financial sector. However, the past 20 years have been characterized by a push for economic diversification, and increased transparency and regulations following the financial crisis, said Minister Fayot.

“What we are trying to do is diversify [the economy] even more into new sectors to make us less dependent on the financial sector and adaptable to new circumstances,” he said. “We are also more and more developing a green finance sustainable finance sector, which is doing very well.”

A green state responsibility

Minister Fayot, whose guiding principles are a strong welfare state and sustainability, firmly believes that the government must assume its pivotal role in shifting the economy towards sustainability — “both in terms of environmental sustainability, but also social sustainability,” he added.

In June 2020, an international consultation was launched to gather strategic spatial planning project ideas considering the climate-related challenges and social issues, and support for the country’s ecological transition towards a zero-carbon territory by 2050.

“We need to understand that we have to help businesses innovate, and invest in the future,” said Minister Fayot.

A rising startup ecosystem

Luxembourg has seen a steady growth in startups over the past decade.

Earlier this year, the Ministry of the Economy launched a strategic initiative aimed at providing a thorough understanding of the startup ecosystem based on data analysis and interviews with key stakeholders.

Luxinnovation, the national innovation agency, identified over 500 active startups offering innovative digital and data-driven solutions in its latest mapping.

These assessments will also provide relevant comparisons with international markets, and aim to identify the necessary next steps for development opportunities in the upcoming years.

“Our innovation agency is there to guide startups, but also other more established businesses, to get access to grants,” explained Minister Fayot. “We have a state aid framework in Europe which we have to comply with, but the main message is that there is an obvious need to co-finance innovation, particularly in times when we are in this transition towards a more green economy.”

Going above the limits of territory

Surrounded by Belgium, France and Germany, Luxembourg is one of the smallest countries in the world — slightly smaller than Rhode Island. Yet, despite its dependence on its neighboring countries’ energy supplies, it is making continuous efforts to increase its share of renewable energy by also investing in projects across its borders, said Minister Fayot.

“We don’t have that much sun in Luxembourg, and we don’t have an unlimited space to build wind power,” he said. “It’s a bit of a limiting factor, but it shouldn’t excuse anything.”

“We are investing a lot into energy efficiency,” he added. “We are trying to get people to e-mobility and pushing for geothermal heating and energy in new constructions.”

A growing space sector

Luxembourg might not be the first to come to mind when we think of space, but, the country owns one of the world-leading satellite operators, and is increasing its investment into space resources.

“The SpaceResources.lu is an initiative that we launched about six years ago, and it is very much focused on the space resources segment of the space industry,” he said. “We are not launching anything in space out of Luxembourg, but focusing on services like space traffic management.”

As part of the economic mission, a group of space companies participated in a distinctive program set up by the Luxembourg Space Agency in collaboration with the Canadian Space Agency. This included on-site company visits, workshops and B2B opportunities that led to the signing of a Memorandum of Understanding between the two national space agencies.

Stephanie Ricci contributed to this story.

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Edmonton needs a nighttime economic strategy, industry advocates say – CBC.ca

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Edmonton’s nighttime entertainment and hospitality venues need more support if the city is going to host big events like the Juno Awards next year, industry advocates say. 

At a meeting Wednesday, venue operators and business associations called on city councillors and administration to create a special office or person to directly support the nighttime industry. 

Puneeta McBryan, executive director of the Downtown Business Association, said the city’s existing economic development staff are overstretched on daytime operations alone, and said that nighttime industries need help. 

“Dedicated resources to this are absolutely essential,” McBryan told council’s executive committee. “We’re losing venues. If we haven’t already lost them, we’re at risk of losing them.”

McBryan said that potential gap in venues concerns her as Edmonton gets ready to host the Juno Awards next year. 

“I’m frankly really nervous about how many off-site venues we even have to host music events anymore, in our downtown,” she said. 

Ward papastew Coun. Michael Janz said he supports the idea of a nighttime economic office and echoed McBryan’s concerns about whether Edmonton will have sufficient spaces for the Junos next year. 

“One of the best parts about the Junos is not the awards, it’s the three weeks before and three weeks after when all the visiting artists are coming in and jamming out,” Janz said. 

Brent Oliver, a venue programmer and former manager of several music venues in Edmonton, spoke to the committee about the Junos, and said the event needs about a dozen spaces.

“It will likely be a stretch to try and get 11 or 12 venues at this point, and to try and also keep it walkable, I think is very important, which would mean trying to stay downtown,” he said. 

Dedicated office would help: advocates

Oliver also made the case to councillors for a designated nighttime economic office and strategy.

“Currently venues like the Starlite Room, theatres like the Citadel, bars and pubs along Jasper Ave. have to jump through various municipal and provincial departments to get permits, approvals, city support, enforcement and licensing,” he said.

He suggested a nighttime economy approach for the arts, sport and hospitality sectors would help businesses navigate issues around operating after work hours. 

“Our industry provides so much for Edmontonians and tourism, as well as a significant economic impact on the city,” he said. 

Organizers of music festivals, outdoor beer gardens and markets operating outside business hours have no one to call if there are last-minute or unforeseen questions in operating the event, McBryan said.

Oliver said after-hours issues became more obvious during the COVID-19 pandemic. 

“Many of my colleagues were left having to speak directly to city council members and elected officials to address issues of funding, safety and support,” he said.

Councillors directed city administration to report back ahead of the 2023-2026 budget cycle in the fall with a model to support the nighttime economy, and consider a designated person like a night mayor, as one of the potential options. 

Mayor Amarjeet Sohi acknowledged the need to develop the nighttime economy as part of a thriving city in entertainment, arts and culture. 

“And having more eyes on the street in the evening, on the weekends,” Sohi told reporters outside the meeting. “It is important that we have dedicated resources to support the growth of that sector.”

The Alberta government has recently allowed municipalities to create “entertainment districts” within a city, where there could be a suspension of open liquor laws, McBryan said. 

Other cities have nightlife economic strategies, a city report shows. 

Toronto has a nightlife action plan and the deputy mayor on council is the night economy ambassador, while Ottawa is developing a plan. 

Abroad, New York has a night mayor and Pittsburgh has a nighttime economy manager as well as action teams to address nighttime activities in public safety, hospitality, development, transportation, and personal accountability.

London, England, has an extensive strategy that includes a Night Czar, a post-pandemic plan with recommendations on visas, training, creative hubs, safety, and licensing, and a women’s night safety charter. 

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Copper Sinks Toward $8000 in Bleak Signal for Global Economy – Bloomberg

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Copper Sinks Toward $8000 in Bleak Signal for Global Economy  Bloomberg



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