Eq: Total Market

(Washington)

In order to meet the ambitious new emissions targets put forward by President Obama last week, a number of states, including Washington state and Pennsylvania, are considering adding their own carbon trading schemes. States each have to meet their own emissions targets, which is an impetus to develop their own specific schemes. Scientists consider CO2 emissions to be a principal contributor to global warming, but pricing the gas at the national level has proved difficult and divisive politically. So far, programs have been designed in a “cap and trade” fashion, where companies receive emissions permits from governments and can then buy and sell them according to their needs. State governments can save over a $1 bn in compliance if they band together to implement new schemes, though the political will to do so remains questionable. The Obama administration believes that a market-based solution remains the best way for states to meet their individual emissions targets.


 

FINSUM: The impact of Obama’s bold move on emissions is now being felt across the country as states scurry to meet the proposed standards. A state-by-state market system seems like it will prove costly and inefficient in the long-run.

(Mexico City)

The FT’s senior columnist Martin Wolf has published a thorough and engaging study of the Mexican economy and relates it challenges and opportunities. He explains that Mexico has suffered from a “productivity puzzle” where large business’ productivity has grown considerably while smaller firms’ productivity has dropped at the same time as their share of the economy has grown. Basing his arguments on a McKinsey study, Wolf also believes part of the issue is that Mexico has an “extraordinarily small” corporate credit market, with SME’s suffering from an estimated $60 bn credit shortfall. Wolf also believes the country’s formal sector needs to be opened to more competition and less regulation at the same time as the informal sector needs more regulation and monitoring. This difficult policy need is left to reformist President Pena-Nieto, who is in the midst of a strong push to overhaul Mexico’s economy through the denationalisation of the oil industry and reforms of the tax, education, and labour systems.


 

FINSUM: This is a great article for understanding the past, present, and future of Mexico. The country has a real opportunity to grow given the soaring wages in China, and now it need to navigate that opportunity correctly.

(Washington)

In what is quickly growing into a humanitarian crisis, the United States has seen rates of child immigrants surge this year to upwards of 47,000. Child immigrants, in this case primarily from Central America, are immigrants who cross the national border unaccompanied. The US government has taken these children in and is caring for them during investigations of their cases in a number of centres across the southwest, but the situation is growing much worse, as cases have doubled over the last year. All told, the program for caring for the children will cost the government upwards of $2 bn. Worse yet, the condition of the care centres is said to be deplorable, with children sleeping in plastic containers and not bathing for ten days at a time. Children from Mexico are usually sent directly back to their home country, but when they are from Guatemala, Honduras, or El Salvador, as most of this year’s immigrant children are, they become wards of the state, and the responsibility of the Department of Health and Human Services. The White House has said the rise in immigration might be due to a false rumour that immigrant children have special rights which would allow them to stay.


 

FINSUM: This is a deplorable situation all around, especially for the vulnerable children, and it puts added pressure for the US to reform its immigration system.

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