This analysis was written on August 14, 2007
2007: The end of the economic world as we know it? (Philosophical)
Part 1: Dynamics
Troubling economic growth results in France, Germany, the Eurozone 13 and the EU 27 in the second quarter (aka "Q2") of 2007!
France and Germany grew by just 0.3%, below expectations!
The whole of the Eurozone 13 (France, Germany, NL, Belgium, Luxembourg, Spain, Portugal, Italy, Greece, Slovenia, Ireland, Austria and Finland) also grew by the same, 0.3%, down from 0.7% in Q1.
The EU 27 (Eurozone 13 plus UK, Denmark, Sweden, Lithuania, Poland, Latvia, Estonia, Hungary, Czech Rep., Slovakia, Bulgaria, Romania, Cyprus and Malta) did a tad better in Q2, 0.5%, also down from 0.7% in Q1.
Part 2: Strategic
So, what is holding economic growth in "Europe" back?
France is said to suffer from major "structural" and "deep" problems that N. Sarkozy and his government will try to "heal".
Germany's problem in Q2 is said to have been due a hickup in the construction sector!
Is the strong Euro holding EU exports back (correlate that with the political efforts to bring the European Central Bank under more "EU political" control)?
But is the US's "model" better? Or, what is more to the point, would it be suitable for Europe?
The US has a much more flexible labour market (except for, maybe, the UK), but is still a maze of 50 states with different state laws and taxes and other regs, but with a common language and pop culture, but not much of a "social safety net", some people in the US work but their salaries are lower than unemployment benefits in much of Europe and cannot cover the bare monthly essentials, the US has been running a large budget and trade deficit, it has been counting on
a) the "eternal confidence of the US consumer" in spite of all (or almost all? so far?) adversities and glooms,
b) Global investor confidence in the US economy and US stocks/companies in particular
(Q: are US quoted corporations still "American or does the stock ownership now qualifies them as multinational?? - America is a capitalist country but are Americans capitalists, in that they do not own hat much of their ("American") companies' stocks (but rather, their homes, ie real estate capital)?
The EU - Eurozone has been counting, it seems, on
a) making the baby Euro a globally credible currency, to have and to hold to trust and to invest in,
b) the 14 year old by now Single Market (how single is it, though, after 14 years?)
c) The German economy as a traditional steam-engine of growth (well, has it, since Re-Unification??)
d) A global UK economy
e) A so called "European" socio-economic model (to be psycho-analysed some other time) or rather, 4 or 5 different versions of it (British/Irish, Scandic, Central Europe, South European and Eastern European, or something like that, analyses/labels differ)
f) The US economy (!!!)
g) Something else (please specify): __________________ (maybe a more central planning
approach to policy)
Part 3: Philosophical
On the other hand, for the first time (ever?) the steam engine of global economic growth this year in not going to be American or European, but, ... Chinese! Yes, China is this year the economy that is driving the world to growth, not the US, not Germany, not the UK, not Japan, not the G8, not the OECD, nope, China! Oh yes, the (economic) world as some were accustomed to "know" it has ended, and the "Poles" of the economy are shifting, North, South, etc, and "violent" changes in the socio-economic climate are testing the endurance of humankind! No, it is not December 21, 2012, not the end of the Mayan calendar of the world, maybe it is the end of the traditional economic "calendar" of the world and the shocks are to come, soon, to a market (rather than a theatre) near you!
Yes, it seems that the economic "box office" blockbusters of the world are not of US or German or other European "production" anymore! New "studios" have come to the global economic "Holly Wood/Wall"!!
And a lot of "actors" are finding themselves out of the economic and social "spotlight" or are lobbying hard to keep their careers on track (US and European farmers, certain US manufacturers, etc).
Oh what interesting times we live in (an Ancient Chinese curse).
Should we try the I Ching method to tell us the future of stocks, bonds, house prices, economic growth, etc? Why on Earth not? Can anyone predict the economic future anyway? Delphi, Merlin, Nostradamus, Mayans, etc!
Many predictions do sound like the Delphi double edged or meaning oracles these days.
It is called "expectations"! Reminds one of Charles Dickens' book!
"Moderation is good" (Ancient Greek philosophy) aka "Chill"! In the long run .... all will be fine!
Dinosaurs cannot withstand major "climatic" changes! Roaches can, tho!
Does this imply a "small is good" oracle type pre-diction of mine? Oh no, I am not a prophet, I am merely a philosopher and a cook of food for thought! "Souvlaki" anybody? "Chicken", "pork" or "veal"? With or without "pita"?