Fri, 23rd June 2017

Anirudh Sethi Report


Archives of “Political philosophy” Tag

Japanese Prime Minister Shinzo Abe’s approval rating plunges amid lingering school scandal

Support for Japanese Prime Minister Shinzo Abe’s government has dropped below 50% for the first time in more than a year as respondents expressed dissatisfaction with his response to allegations of preferential treatment toward a conservative educator.

The cabinet’s approval rating plunged to 49% in a weekend poll by Nikkei Inc. and TV Tokyo, down 7 percentage points from May and 11 points compared with April. The government’s disapproval rating climbed 6 points to 42% — the highest since October 2015.

 This marks the Abe cabinet’s most serious setback in public opinion since that year, when legislation expanding the armed forces’ remit ignited a public debate on Japan’s commitment to peace.

Now, the prime minister is facing allegations of favoritism over plans to establish a veterinary school in a government-designated special zone for deregulation. The prospective school operator, Kake Educational Institution, is headed by a friend of Abe’s.

The government insists that all of the proper procedures were followed in approving the new school. But a purported memo describing the project as in line with “the prime minister’s wishes” — a document whose credibility the government had questioned — has been found at the ministry of education after a second internal investigation.

The ruling coalition’s move to cut short the upper house debate on anti-conspiracy legislation also seems to have contributed to the drop in support. Among other things, the recently enacted law makes it a crime to plot terrorist attacks. Nearly half, or 47%, of respondents support the law, which has raised concerns among civil liberties groups, while 36% are opposed.

The cabinet’s approval rating fell among both men and women. Only 24% of respondents unaffiliated with any political party expressed support for the government, down 5 points from the previous survey.

S&P on the US: Rating affirmed, outlook remains stable

Standard and Poors, confirm USA rating at AA+/A-1

And keep the outlook at stable (S&P know how to play the game 😉 )
  • On US says high general government debt, relatively short-term-oriented policymaking, uncertainty about policy formulation constrain ratings
  • Says some of administration’s policy proposals “appear at odds” with policies of traditional Republican leadership and historical base ​
  • Stability and predictability of US policymaking and political institutions are high
  • Disagreement across & within US political parties resulted in slower decision-making & has limited government’s ability to enact forward-looking legislation
  • “We don’t expect a meaningful expansion or reduction of the fiscal deficit over the forecast period”
  • S&P don’t expect a meaningful expansion or reduction of US fiscal deficit over the forecast period
  • On the Federal Reserve – expect slow and measured increases in the overnight rate as decisions remain data driven‍
  • Political divisions will continue to weigh on government’s ability to address public finance pressures in a more timely manner
  • Expect continued gains in manufacturing because of competitive labour costs, lower cost of natural gas stemming from shale gas production
  • Expects Congress to ultimately rasie or suspend the debt ceiling
  • Believe that at present prospects are more remote for deeper fiscal reform
  • outlook signals view that negative and positive rating factors will be balanced over the next 2 years

Headlines via Reuters

Merkel victory in German state election

Plenty of politics in the early part of the forex week

French election, of course,
  • French election results, official counts coming now 
  • Macron wins French election – EUR higher (early price indications)
  • French election results – Le Pen concedes defeat
And, in Germany –
An election in the German state of Schleswig-Holstein:
  • Chancellor Merkel’s conservative party won, her  Christian Democrats on 33-odd % of the vote (initial result)
  • The Social Democrats had been in power, but only won 26.5%
Polls had been predicting a much tighter result, so an outperformance by Merkel’s party here
And, while your here, rates update:


A three-member arbitration panel has started hearing validity of the Government’s demand of $1.55 billion as compensation from Reliance Industries for “unfairly” producing ONGC’s gas.     The panel, headed by Singapore-based arbitrator Prof Lawrence Boo, had its first hearing on March 3 where the timetable was drawn, sources privy to the development said.

RIL will first file its statement of claim, followed by a statement of defence by the Government. This will be followed by rejoinders, counter-rejoinders and oral hearing, sources said, adding that the panel plans to wind up the hearing in a year.

The Central Government has named former Supreme Court judge G S Singhvi as its nominee on the three-member arbitration panel while RIL and its partners BP Plc of the UK and Canada’s Niko Resources have named former UK High Court Judge Bernard Eder to the panel.

RIL-BP-Niko had slapped an arbitration notice on November 11 last year.

This was against the oil ministry’s November 3, 2016 notice to RIL, Niko and UK’s BP seeking $1.47 billion for producing about 338.332 million British thermal units of gas in the seven years ended March 31, 2016 that had seeped or migrated from the Oil and Natural Gas Corporation’s (ONGC) blocks into their adjoining KG-D6 in the Bay of Bengal.

Audit cop lens on note ban

The Comptroller and Auditor General of India (CAG) plans to audit the impact of note ban and the effect it has had on the government’s tax revenues, CAG Shashi Kant Sharma said.

Sharma said the auditor was gearing up to audit tax revenues under the new goods and services tax (GST) regime and has started capacity building and reorienting its audit methods and procedures.

The government had withdrawn old Rs 500 and Rs 1,000 rupee notes from circulation on November 8 last year, and announced a new tax amnesty scheme for those holding unaccounted junked currency.

“We plan to audit certain issues related to the fiscal impact of demonetisation, largely its impact on tax revenues,” Sharma said.

The CAG audit may look into the expenditure on printing of notes, RBI dividend payout and banking transaction data.

The auditor has also conveyed to the government its stand on the recent move of the GST council to delete section 65 of the preliminary draft that authorised CAG to audit GST. “Our mandate covers GST just like the earlier taxation regimes were covered. We have already started work on restructuring our revenue audit arrangements to meet this likely challenge when GST is introduced,” Sharma said.

School scandal brings political risk to Japan

The scandal over a shady land sale to a nationalist school operator has dealt a rare blow to Japanese Prime Minister Shinzo Abe’s government, unnerving investors counting on continued political stability.

Getting out of hand

 The issue boils down to whether an 800 million yen ($7.19 million) discount on land sold to Moritomo Gakuen by the government was appropriate, and whether any political figures were involved in the sale or the approval process for the school to be built on the plot. If politicians did play a role and money changed hands, that could be considered graft.

Moritomo Gakuen chief Yasunori Kagoike alleged political involvement when he testified Thursday before the Diet, but this has been denied by officials who led finance bureaus involved in the deal. Yet government explanations have not cleared up public doubts about the process or the sale price.

“It’s a shame that this couldn’t bring the matter to a close,” a senior government official said after Kagoike’s testimony.

The prime minister’s office led the effort to bring Kagoike before the Diet, seeking to highlight contradictions in his claims. Yet the administrator did not budge even while under oath, putting the onus on the government to explain the sale as well as the role of Abe’s wife, Akie.

Moody’s cuts outlook on Turkey credit rating to ‘negative’

Moody’s late on Friday cut its outlook on Turkey’s rating to “negative” as risks to the country’s credit profile have “risen materially” in recent months.

The ratings group noted that the “tense political environment” following the coup attempt last July has “persisted for longer than expected” and that actions taken against various forms of opposition to the government have “undermined the country’s administrative capacity and damaged private sector confidence.”

“Partly as a consequence, Turkey has experienced a further slowdown in growth,” Moody’s added.

Moody’s rates Turkey at Baa1. It previously had a “stable” outlook on the sovereign.

5 things to watch in Janet Yellen’s testimony Thursday

In the Wall Street Journal, in their ‘5 things to watch’ format – Janet Yellen’s testimony coming up at 10 NY time Thursday

  1. All ears will be listening for Ms. Yellen to affirm recent statements from her colleagues that the Fed remains on track for a December rate increase.
  2. Yellen’s view of the market’s election result reaction – including a rise in government bond yields.
  3. The potential economic effects of Mr. Trump’s proposed fiscal policies
  4. Yellen to make the case against political interference in the Federal Reserve
  5. Yellen’s views on the risk of a sharp upturn in inflation

UK court: Issue before the court is a pure issue of law and is justifiable

First comments coming out from the UK High Court

  • Issue before the court is a pure issue of law and is justifiable
  • Government accepts that a withdrawal can’t be conditional or withdrawn, so rights would inevitably be lost by withdrawal
  • Normally treaty powers are a matter for the prerogative
  • Government does not have the pregative power to give notice

That’s the clincher. The gov loses the case. Cable bolts to 1.2448.

Very choppy in the pound and the government has already announced it will seek permission for an appeal.

As I type, the government has been given that permission. Appeal date set for Dec 5th-8th

That’s going to take some of the steam out of the initial headline rally that the UK gov lost the case. It’s more uncertainty being kicked down the road. From here expect a multitude of government ministers to air their views which could mean more vol for the pound. Tread carefully folks.

FBI’s “explosive information” on close ties between Trump & Russian government

Reuters with comments from US Senate Democratic leader Harry Reid

  • Says FBI Drector Comey “may have broken the law” by publicly disclosing new steps in Clinton email probe this close to election day
  • Says ” it has become clear” FBI has “explosive information” about close ties between Trump, his top advisers and Russian government
  • Accuses Comey of “double standard” and selective approach to publicizing information

Looks like plenty of politics still to come in this countdown to the election. Should be fun.