Terror in Turkey, Spanish elections and Brexit confusion. 25 June-1 July: what just happened?
Turkey struck by terror, again
On Tuesday, three suicide bombers targeted Istanbul’s Ataturk Airport, killing 41 people, and injuring at least 239 others. It's Europe's third largest airport, and its the start of the Turkish tourism season, so it's a seriously vulnerable target. To even mention the economy in the wake of moments of horror like this doesn’t feel quite right, but the fact is, this comes at a time when Turkey’s tourism industry is already struggling. The number of foreign visitors to Turkey fell 23% earlier this year - that’s a big deal for a country where tourism and travel makes up 5% of its GDP, supports 8% of its workforce, and brings trade to thousands of small businesses. Although Isis hasn't claimed responsibility for the attacks yet, the fact that the attack targeted a terminal that connects travellers from US, Europe, and Africa looks like it could easily be part of the terrorist group’s reported strategy of disrupting the tourism industry. The months ahead don't look good for Turkey, with serious questions over its security, its politics and its economy. It’s a grim situation, with lives lost, hundreds injured, hundreds grieving, and thousands fearful for their futures.
Second Spanish general election in six months ends in a draw (sort of)
Spain had its second election in six months on Sunday and it was a mighty close run thing, with no party achieving a clear majority to be able to form a government. The conservative ‘People’s Party’ (PP), led by current Prime Minister Mariano Rajoy, won with 33% of the vote. But they've failed to form a coalition government because members of the second largest party, the Socialist PSOE, who received 23% of the vote, refuse to work with them (no surprises there – they stand for pretty much the opposite things.) Spain’s economy has been fragile since 2008, with around one in five people unemployed (including 45% of its young people) and reaching sky-high proportions. So things aren’t looking great. Meanwhile, far-left parties are getting stronger and stronger. Bred out of frustration from the forced austerity measures coming from the EU, they came third with 21% of the vote, although this was a million less votes than they got in December. Finally, the centrist Ciudadanos party received 13% of the votes, but have also refused to cooperate with the PP – basically, no-one much feels like cooperating with anyone. They've got to make something work, but who knows how – what’s certain is that no one really fancies a third election, and that this political uncertainty has the potential to undermine economic recovery, just three years after Spain emerged out of recession.
After Brexit vote, does anyone know what the hell’s going on in the UK?
Confusion reigns in the UK at the moment, with no clear plan of how to actually leave the EU yet emerging, and leadership contests being run in the two major political parties. Add to that the fact that the pound has fallen in value and the have been freaking out. Supposedly, nothing can happen until whoever the new UK prime minister is (TBD in October) decides to 'trigger Article 50', or formally say to the EU that they're out – which would require approval from the UK parliament. EU officials appear to want it to be done, like, yesterday - but British politicians seem to be saying, “Umm, can we just do it in a bit, say perhaps in three, or four, or five months?” One they finally bite the bullet (if ever), the UK will have two years to pack its bags and get out. It also means entering loads of complicated negotiations over things like access to the single market, travel arrangements, and what happens to EU citizens already living and working in Britain. It’s a bit like a messy divorce, with each party deciding who gets to keep the cat, who gets the copy of Fleetwood Mac’s ‘Rumours’, and other equally important stuff like that. In the meantime, everyone in the country has been advised to keep calm, put the telly on, and be, well very British about the whole thing.
The head of the Chinese central bank says “no one understands what I do”
‘It’s complicated’ isn’t just a term just reserved for your Facebook relationship status - it’s also used to describe China’s extremely confusing banking system. According to Zhou Xiaochuan, his complex role as Governor of China's (PBOC), goes beyond the average person’s understanding. But if you feel like there’s some shade being thrown at your intelligence, don’t fret too much. China's in what's known as a ‘transition economy’ – moving from a state-planned system to a more 'free market one'. So an average workday for Zhou includes dealing with terms like ‘Dynamic Stochastic General Equilibrium’ and ‘Structural Vector Autoregression models’. Scratching your head yet? Yeah, so are we. That’s because these models are expressed in ‘vector quantity’, whereas, the average person typically uses ‘scalar quantity’ (...words), and logic to describe how we make decisions. For now the bank thinks they can't make this transition without using these complex vector models. Sounds like a bit of a lame excuse to us. But Zhou seems to think the confusion is worth the cost, as China’s outperforming other transition economies in promoting reform and maintaining financial stability. Once the transition is complete, Zhou believes the bank will chillax on the wordplay. Umm, like yeah, whatever. Do I look bovvered?
In other news...
Sign of the times? One of Prince’s favorite guitars has just been sold at auction in the US for $137,500. It was bought by a wealthy collector of rock paraphernalia, who also just bought one of Ringo Starr’s old drum kits for $2.1 million. A lock of David Bowie’s hair was sold at the same auction for $18,750.
Diamonds aren’t forever. The world’s largest uncut diamond (about the size of a tennis ball) has failed to sell at a London auction after the minimum reserve price of wasn’t met. It was expected to sell for around $70 million but the highest bid was only $61 million. The company the currently owns the diamond saw its stock price fall by 14%, after the gem didn’t attract a buyer. Cheapskates.
Sunshine or your money back. A seaside resort near Venice is offering beachgoers a refund if rain ruins their day. A lot of beaches charge in Italy charge people to sun themselves, and so the new measure is designed to keep people booking spots, as there’s been an 18% drop in tourists in recent months, due to bad weather. The scheme goes under the slogan ‘tan or your money back’.
The $15 billion refund. German car-maker Volkswagen will have to pay out around $5,000 each to some 500,000 US diesel owners, after the emission scandal that rocked the company last year. That’s on top of a 20% decrease in sales, all of which added up to VW’s first annual loss in 20 years.
It’s gettin’ hot in here, so take off all your clothes
Workers in Belarus have been stripping naked and taking photos of themselves, after the country’s president urged citizens to “get undressed and work till you sweat”. President Alexander Lukashenko was giving a speech about the importance of technology for the nation’s economy, but made a slip when he said “get undressed” instead of “develop yourselves”, which apparently sounds very similar in Russian. Now thousands of officer workers have been strippping off at work, taking selfies and posting them on social media with the hashtag #getnakedandgotowork. Lukashenko has been in power since 1994 and was referred to by the US as “the last dictator in Europe”. He’s since developed what he calls ‘market socialism’ as opposed to the ‘wild capitalism’ of Russia, which means there’s still significant state control of the economy. The country has been in recession though, and so he’s just announced a series of reforms which include a reduction in state administration, renewed job creation, development of the hi-tech sector, and closer ties to the EU and US. It looks like Belarus is coming round to the idea of market-led economics after all. You might say they’re beginning to embrace ‘naked’ capitalism, if only with the private parts still discretely tucked away or hidden from view.