Monday, 29 June 2009

Environment and our "way of Life"

In my non-environmentally expert (but philosophical and systemic) opinion, we need to radically reduce humankind's carbon footprint on this planet, because we will not be able to replace CO2 with solar and wind etc at a 100% or even comparable level.

Can we maintain our "way of life" while radically reducing its total carbon footprint? IMO we need to better define what our way of life really is. Analyse it and break it down to its fundamental components: economic, social, civic, cultural, etc, and see how these fundamental elements can be kept but in a much more environmentally friendly
way.

freer trade better for the environment?

While more international shipments of goods may lead to more pollution emitted from planes, trucks and boats, a WTO/UN Environment Program report released on June 26 argues that freer trade would also make green technology more accessible to more consumers, effectively lightening the world's carbon footprint. I am not convinced as to the net benefit, based on this rationale (margin cost to the environment vs. marginal benefit).

Sunday, 28 June 2009

"Graffiti 2009"

Lusting on a beach?
Casting for a play?
Fasting for a cause?
Trusting in an asset?

Profiteering in free trade?
Demonstrating for world aid?
Managing in global markets?
Decision making in uncertainty?

Shareholder value maximizing around the world?
Hitch hiking in Southern France?
Lobbying in DC?
Vagabonding in South America?

Investing in London?
Trade negotiating in Geneva?
Service providing throughout the EU?
FTA building in WTOland?

Loving in Paris?
Marrying in Rome?
Divorcing in Vegas?
Having children in Asia?

Living in the world?
Living off the world?
Living online?
Living on the line?

Investing in dreams?
Investing in hope?
Merging companies?
Or acquiring global tastes?

Competing in dilemmas?
Competing in blue oceans?
Harboring expectations?
Or evaluating risks?

"Merchants of Dreams"

Right moves
Adverture movies
Right things
Wrong people

Hope springs
Dreams' falls
Wild rivers
Quiet lakes

Oceans apart
Fluid states
Come within
Go far away

Travellers and settlers
Cowboys and desperados
Pirates and heroes
Traders and protectionists

Servers and protectors
Defenders and center forwards
Playmakers and centers
Batters and sacrificers

Quarterbacks and running backs
Green bucks and Euros
Free traders and free grazers
Ladies in luck and Ladies of luck

Saloon or Casino?
Love or In Love?
Greed or Passion?
Passion or Fashion?

(November 2005)

Saturday, 27 June 2009

US household savings in May

Households' savings rate in May reached 6.9%, the most since December 1993, while it was close to zero in early 2008. This could be partly attributed to an affect of the US stimulus package.

While higher savings indicate a stronger economy, more consumer spending is required for a sustained recovery, especially since the US economy is 66%+ consumption!

US consumer confidence

According to the University of Michigan's index of confidence, US consumer confidence rose in June to its highest level since February 2008.

Does this suggest the worst of the recession may be over?

Should the USD be replaced by an international currency?

China's central bank has reiterated its call for a new reserve currency to replace the US dollar.

The head of the Central bank of China Mr. Zhou Xiaochuan has led calls for the US Dollar to be replaced consider an alternative benchmark currency, divorced from sovereign states, for international debt, reserves and other international economic-financial "affairs". The Russian President, Mr. Dmitry Medvedev has also supported this view, but not as an immediate decision.

Notably, the Chinese central bank's recent report calls for more regulation of the countries that issue currencies that underpin the global financial system.


"2010 Governing Dynamics"

video

An audio-visually "loaded" pop art commentary on the governing dynamics of our times!

Friday, 26 June 2009

Who makes History?

is History made by the "VIPs" or the "ordinary people"?

6 months left in 2009, 6 or 18 to the end of the decade

video


Listen to this pop art commentary on the first decade of the 21st century and the 3rd millenium.
With a food for thought Epilogue!

over-dependence on foreign trade?

According to the German Finance Minister, Germany must begin to reduce its dependence on foreign trade.

My comment:

1. does that include intra-EU trade?
2 should the EU (as a whole) do the same?
3. others (countries or "regions" (eg Mercosur, ASEAN, etc)?

One of the "troubles" with foreign trade is that even today it is not "free" (of quotas and tariffs) even between the WTO (ex-GATT) member countries and that economies, most if not all, that relied up to 50-80% on exports trade are being hit the hardest by the global economic crisis.

US recession slowing down (The Fed)

The Federal Reserve had indicated that the pace of economic contraction in the US is "slowing" down. Yet the Economy is likely to remain weak.

Q1 2009 US GDP growth

In Q1/2009, the US economy shrank at an annualised rate of 5.5%. This is better than previously expected.

Wednesday, 24 June 2009

OECD: slowdown reaching the bottom but ...

According to the OECD’s latest Economic Outlook, the slowdown in the economies of the OECD member countries is reaching the bottom (following the deepest decline for more than 60 years). But the OECD warns that recovery is likely to be weak and fragile, and the economic and social damage caused by the crisis will be long-lasting.


US consumption of expensive goods in May

The return to glamour?
US Sales: Surprisingly, the demand for expensive goods increased in May, the third rise in 4 months!

US real estate: new homes' sales declined in May

Real estate: The sales of new homes declined in May, defying expectations; it seems that many buyers opted for cheaper previously owned homes that are on discount.

Public Affairs diary EU - UK - Europe


Note: The thoughts and topics in this diary are discussed from a public affairs and not a financial analysis or even economic analysis point of view.

June 23:

* UK: According to the Centre for Economics and Business Research (CEBR) approx. 334,000 jobs will be lost in the Business Services sector by 2011 because of the economic crisis.

June 22:

* Germany: According to the Ifo index, in June, companies in Germany were more "confident" than in the last 7 months.

* Eurozone: According to the President of the European Central Bank, governments that have borrowed heavily to boost their economies should not accumulate any more debt.

* UK:
car production dropped sharply in May (on year-on-year basis)

June 21:

UK, May: Retail sales were 0.6% down compared with April and 1.6% lower May 2008.

Yet sales in the March to May trimester were up 0.3% compared to December 2008 - February 2009.


June 18 - 19: EU Summit results

* Commission President: Jose Manuel Barroso got unanimous backing by the heads of state and government of the 27 for a new five-year term as European Commission president.

* EU Treaty: The new referendum in the Republic of Ireland seems that will take place in early October. The Irish Irish Prime Minister is optimistic that the deal achieved in the Summit on an EU protocol as well as a legally binding EU decision that clarify that the new EU Treaty (the Lisbon Treaty) will not affect Irish sovereignty re military neutrality, taxation and anti-abortion policy will manage to reassure the Irish voters and thus yield a "Yes" majority this time.s


June 12:

Eurozone: Industrial production in April was down a record 21.6% compared to April 2008.

June 9:

The EU institutions upcoming work:

June 18-19: European Council - Summit Leaders where the heads of EU states and governments will decide who to nominate for the position of European Commission President for the next 5 year term which will probably start in late 2009.

The incumbent President and former Portuguese Prime Minister José Manuel Barroso has secured the initial backing of many EU leaders, including at least 3 social-democratic ones.

Yet he will need the approval of a majority of the MEPs for his nomination. The EPP has 265 members which is way short of the 50% + 1 number. Notably ALDE (and the Greens) have publicly opposed another Barroso term! (The EP will vote on the nomineed for Commision President probably on July 15 and on the whole Commision "cabinet" (or "College") later, this autumn).


July 14-16 (Strasbourg):
The EP's first Plenary meeting.
The vote for Mr Barroso's candidacy is provisionally scheduled for 15 July.


Parliament's 20 Committees will meet for the fist time in the 2009-2014 term in the weeks after 20 July.


June 8:

* EU

Record low voter turnout in the EU's European Parliament elections.

* Hungary

The economic situation seems to have affected imports more than exports, thus Hungary posted a trade surplus of Euros 619 million in Q1/2009 compared with a Euro 282 million surplus in Q1/2008! (source: KSH)

June 3:

EU27:

Eurostat estimates that 20.8 million people in the EU were unemployed in April, 556,000 (8.6%) more than in March (8.4%).

Eurozone16:

Eurostat estimates that 14.58 million people in the Eurozone were unemployed in April, 396,000 (9.2%, the biggest rate since 1999) more than in March (8.9%).

Spain tops the rates with 18.1% (major problem is the real estate - construction sector's crisis), whereas Netherlands has only 3%, followed by Austria (4.2%).


May 29:

* Eurozone16 inflation zero (!) in May! 0.6% in April.



May 25:

England and Wales:
Improvement in business confidence index
The Institute of Chartered Accountants' index of business confidence rose to -28.2 at the end of March, from -45.3 at the end of the December.


Germany: Improvement in the business climate in May ..


... based on the Ifo
Business Survey May 2009, driven by the 'climate' in wholesaling and in retailing, whereas in manufacturing the business climate remains unchanged and the business climate in construction has worsened once again.

Of course, business confidence, by its very nature (a sentiment, ie emotion) is based on surveys of samples and creation of indexes, not statistical data.


May 23:

* The UK economy in Q1/2009

The GDP of the UK economy in Q1/2009 shrank 4.1% on a year-on-year basis and 1.9% when compared to Q4/2008. The decline in manufacturing was less steep than previously thought, ie down 5.5% is the revised number, rather than 6.2% as initially estimated, but still the biggest decline since 1955! Government spending was the only sector of the economy in growth territory (all others had (-) negative growth, ie shrank).

Construction output fell by 2.4%. Meanwhile, the service sector, which makes up the largest part of the UK economy, fell by 1.2%,

May 20:


May 19:


* Consumer subsidies to boost the purchase of new cars: After Germany and Spain, China is planning expand a program that subsidises not only the purchases of new cars and but home appliances as well!

May 18:

* UK repossessions up 50% in Q1/2009.


* Eurozone16 trade surplus in March!

Against expectations for a deficit, the Eurozone16 registered a trade surplus of 400m Euros in March, following a 1bn Euro deficit in February (revised datum). The last surplus had been a mere 20m Euros one in June 2008.

Yet, as a whole, the European Union (27 members) registered a 9.5bn Euro trade deficit in March (10.8bn Euros in February)



May 16:

* Eurozone and EU Q1/2009 data:

The Eurozone16 (part of EU27) declined by 2.5% in Q1/2009 compared to the previous quarter, more than the 2% expected. On a year-on-year basis the decline was 4.6%. The European Commission predicts a contraction of 4% for 2009 in the Eurozone16.

In April consumer price inflation in the Eurozone16 remained at +0.6%.

EU27: GDP declined 2.5% as well, the same as in Eurozone16.

These data are affected significantly by the situation in Germany, which is the largest economy in Europe, the EU and the Eurozone. And whereas the German government has predicted that the German economy will shrink 6% in 2009, the European Commission expects 5.4%.

* Germany: Bank bail-outs

This week, the German cabinet agreed to propose to the parliament a scheme to enable the country's banks to remove remaining "toxic" assets from their balance sheets. How? The banks will be able to swap their toxic debt for government-backed bonds worth 90% of the value of the toxic assets. In return they will pay an annual fee. This toxic debt will be "stored" for up to 20 years. If approved by the parliament, the scheme will be financed by Germany's existing 500bn euros bank rescue fund.

NB: I recall, some week ago, that a proposal had been agreed by the German government cabinet (a historic coalition between the country's two main parties, the Christian Democrats and the Social Democrats) that would allow for the temporary "nationalisation" of any German banks, if needed. I have not kept up with the issue (eg was it finally agreed and was it passed by the 2 chambers of the German parliament?), and I am not sure how it relates to the above scheme.

The Bank of England's announcement that it would keep interest rates unchanged at 0.5%. The Bank of England also said it would pump an extra BP 50 bn into the UK economy via purchases of government and corporate debt, extending its planned spending to £125bn.

May 15:

The GDP stats for the first quarter of 2009 (Q1/2009) are in for Germany, France as well as Spain.
a) France. The fall/shrinking of the GDP was 1.2% (which is in line with expectations) compared to the previous quarter. Since in Q4/2008 the stat was -1.5%, this has given rise to views that the recession in France "may" be easing. No comment! By the way,
the French Economy Ministry expects the French economy to contract by 3% in 2009.
b) Germany: Driven by lagging exports and investment, the GDP drop in Q1/2009 was a record 3.8% (!!), ie the worst GDP performance since re-unification (compared to the previous quarter), yielding a year-on-year drop of 6.7%, against a 6% prediction for the whole year 2009 made by the German government! The Q4/2008 drop, 2.2%, was the previous record low until the stats for Q1/2009 came in!
Is Germany (along with other traditional exports - trade surplus world "champions" economies) paying a price for their over-reliance on exports?
c) Spain:
In Q1/2009. GDP fell 1.8% compared to Q4/2008 and shrank 2.9% on a year-on-year basis, based on preliminary data, making this the worst GDP performance since 1959! The Spanish government has predicted a GDP drop of 1.6% for 2009

Spain, which joined the EEC/EU in 1986, enjoyed 14 years of consecutive growth until it entered into recession Q4/2008. It seems that many experts think that Spain has major "economic imbalances" and that this will delay its rebounding. It also seems that the construction industry's major perils are a core driver of the Spanish economic recession.



May 13:
Europe: In how many of the member countries of the European Union the Euro-MP election period will focus on EU-wide political and policy issues rather than national political - policy ones and (national) party politicking?

In March:
.

UK manufacturing output continued to fall, but the fall was not as severe as had been expected (and that is supposed to create optimism??).
In Q1/09, UK unemployment went up by 244,000 to 2.22 million to 7.1% of the workforce.


May 7:

Several central banks decided to cut their interest rates today.

The European Central Bank has cut interest rates in the Eurozone to a record low of 1%, from 1.25%. It is the seventh time the ECB has lowered its key rate since October 2008, when it stood at 4.25%.
Iceland's central cut rates from 15.5% to 13% in its third cut this year. Denmark cut rates from 2% to 1.65% and the Czech central bank cut rates from 1.75% to 1.5%.


Tuesday, 23 June 2009

back to basics: some thoughts

IMO, the ratings should be de-institutionalized, ie not used as in an "official"-institutional capacity (that was established after the Great Depression).

Plus, instead of a regulation frenzy, policy makers in the US, Europe and elsewhere should, IMO, foster socio-economic systemics that are free from conflicts of interest (using competition law as a tool, inter alia)

new US homes in May: modest rise

According to the National Association of Realtors, in May, sales of previously owned homes rose 2.4% to an annual rate of 4.77 million, up from 4.66 million in April. This means that sales have risen for a second month in a row in but at a slower pace than expected pace.

House prices in May were down 16.8% compared with May 2008 and the average sale price was $173,000 ($207,900 in May 2008).

Monday, 22 June 2009

Is there a need for a Mach II WTO that includes freedom for the "human capital"?

“I am talking about new subsidies being introduced which were given up by countries, trade distorting measures being taken, professionals being refused visas, measures being introduced which are incompatible with the WTO". These are the words of India’s new Trade and Commerce Minister Anand Sharma.

Mr Sharma argues that rich countries must grant Indian professionals more visas as he pressed for a resumption of stalled global trade talks. “Protectionism is also when you do not have Indian doctors coming in freely, Indian nurses coming in freely, Indian IT professionals moving,” he said, voicing a long-standing Indian demand for greater flexibility in allowing the temporary movement of skilled professionals in the US, the UK and elsewhere.

Mr. Sharma was in the US last week and today is in Britain for talks with Peter Mandelson.

While he says that the logjam in the Doha Development Round of trade talks “must be broken”, he also accuses the developed countries of erecting new trade barriers in response to the global recession. And he considers immigration issues, work immigration in this case, part of the "world trade" equation. I fully agree. I actually go further than that, arguing that the (near) free movement of capital and goods must be met by at least equal freedoms for services and immigration among the member countries of the WTO.

And if that is not possible, again IMO, then a "Mach II" WTO could be formed, an inner core within the existing WTO maybe (a la the "Eurozone" core in the EU) that has zero quotas and tariffs as well as freedom of movement and relocation for all the citizens of the member countries (a la European Union).


The World Bank's predictions for 2009 etc

According to the World Bank, net private capital inflows to developing countries fell to $707 billion in 2008, a sharp drop from $1.2 trillion in 2007. International capital flows are projected to fall further in 2009, to $363 billion.

Its report "Global Development Finance 2009: Charting a Global Recovery" warns that the world is entering an era of slower growth that will require tighter and more effective oversight of the financial system.

Developing countries are expected to grow by only 1.2% this year, after 8.1% growth in 2007 and 5.9% growth in 2008. When China and India are excluded, GDP in the remaining developing countries is projected to fall by 1.6%, causing continued job losses and throwing more people into poverty. Global growth is also expected to be negative, with an expected 2.9% contraction of global GDP in 2009.

Global GDP growth is expected to rebound to 2% in 2010 and 3.2% by 2011. In developing countries growth is expected to be higher, at 4.4 % in 2010 and 5.7 % in 2011, albeit subdued relative to the robust performance prior to the current crisis.

The need to restructure the banking system, combined with emerging limits to expansionary policies in high-income countries, will prevent a global rebound from gaining traction,” said Justin Lin, World Bank Chief Economist and Senior Vice President, Development Economics, “Developing countries can become a key driving force in the recovery, assuming their domestic investments rebound with international support, including a resumption in the flow of international credit.”

While the authors note that extraordinary policy responses by a number of big economies have prevented systemic collapse, they stress the importance of concerted global action while the crisis is still underway.

To prevent a second wave of instability, policies have to focus rapidly on financial sector reform and support for the poorest countries,” said Hans Timmer, Director of the Bank’s Prospects Group.

Global integration and the expanding role of private actors in international finance have brought huge benefits, but have also widened the scope for turmoil. Today, developing countries rely heavily on private flows and many countries are being hit by a collapse in corporate finance, with big companies and banks that were powering growth now in distress.

The risk of balance-of-payments crises and corporate debt restructurings in many countries warrant special attention, the report cautions.

Charting a worldwide recovery will require quick implementation of detailed reforms and an eventual shift away from governments having high stakes in the financial system to a resumption of private sector control of the banking system, the report says. In addition, the big expansion of the money supply in advanced countries will need to be unwound and fiscal deficits will need to be cut in the medium term, to maintain debt sustainability and avoid another debt crisis as seen in the 1970s and 1980s.

Outlook for the Developing Regions

East Asia and Pacific The East Asia and Pacific region has felt the full brunt of the crisis because of its close trade links with high-income countries and because of declining investment as well as a drop in exports and industrial production. Growth for the region is projected to be 5% this year, although several EAP countries are projected to see GDP decline. Recovery across the region is expected to begin in the second half of 2009 and into 2010, reflecting substantial fiscal stimulus in China and a modest recovery of export demand in rich countries. However, the turnaround is expected to be gradual, with regional GDP forecast to increase by 6.6 percent in 2010 and 7.8 percent by 2011.

Europe and Central Asia has been the region most adversely affected by recent developments, in large part because many countries in the region entered the crisis period suffering from substantial imbalances. Large current account deficits and domestic overheating made many countries vulnerable to the abrupt reversal of capital flows and weaker export demand that the crisis generated. GDP is projected to fall by 4.7 percent in 2009, recovering to grow by about 1.6 percent in 2010.

Latin America and the Caribbean entered the crisis supported by stronger fiscal, currency, and financial fundamentals than in the past. However, it too is feeling the crisis in part because of falling commodity prices, but also on the financial side as foreign funds were withdrawn quickly. Flexible exchange rates in many countries in the region were able to absorb much of the initial shock and avoid systemic problems even as equity markets tumbled. Regional GDP is expected to decline by 2.3 percent in 2009, and to reach 2 percent growth in 2010.

The Middle East and North Africa region has been less directly affected by the credit crunch than other regions, but local equity and property markets have come under intense pressure, and developing countries in the region have suffered from much weaker conditions in the high-income countries in the region. Remittances, services exports and FDI flows from these countries and high-income Europe are expected to fall in 2009 – cutting into incomes. Growth is projected to halve to 3.1 percent in 2009, then edge up to 3.8 percent in 2010 and 4.6 percent in 2011, partly because the slowdown has been less pronounced in MENA than in other regions and oil demand and prices are expected to remain low.

South Asia has witnessed considerably diminished capital inflows and a falloff in investment growth. GDP is projected to expand 4.6 percent in 2009, down from 6.1 percent in 2008. Regional output is then expected to increase by 7 percent in 2010 and 7.8 percent in 2011. However, threats to long-term growth include the possibility of heightened fiscal pressures if the global recession is prolonged, and large fiscal deficits.

Sub-Saharan Africa has been hit hard by reduced external demand, plunging export prices, weaker remittances and tourism revenues, and sharply lower capital inflows, notably FDI. Growth is expected to decelerate sharply this year to 1 percent, down from 5.7 percent on average over the past three years. By 2010, growth is forecast to rise by 3.7 percent. Sharp cuts in remittances and official aid flows also represent a risk for the region, because many Sub-Saharan countries rely on aid flows for budget support and because remittances are a vital cushion against poverty.

WTO/Doha prospects


WTO/Doha Round:

Trade diplomats in Geneva have already begun initial discussions for a possible resumption of the Doha Round talks talks and some leaders seem keen to see a “roadmap” and “some positive results” by the time the US hosts to the next G20 summit (in Pittsburgh) in September 2009.

The two draft reports, one on agriculture and one of manufacturing, can be used as the base documents for the resumption of negotiations.


Sunday, 21 June 2009

on awareness (embrace or ignore news?)

Philosophical comment/question in pop art (music) format:

video

News of our world: To be embraced or ignored?
Can news provide us the raw materials (decision support inputs) for making better decisions in our lives (business/work, policy, home ec, etc.)?
Companies do the SWOT analysis (strengths, weaknesses, opportunities and threats). How about people (career, life choices) and households (eg home ec)?

Thursday, 18 June 2009

signs of the times: living with uncertainty (pop philosophy)

Uncertainty is the way of the Nature. Can we give up our craving for at least some "basic" certainties?

food for thought in musical format:


video

Wednesday, 17 June 2009

new US homes in April

While the number of new houses being built in the US in May bounced back from record lows in April, industrial production in the same month fell by more than the analysts' expectations.

On the other hand, the Economic Advisory Committee of the American Bankers Association expects economic activity to increase by 0.5% between July and September (Q3/2009), thus providing growth (ie positive growth of the real Gross Domestic Product), albeit not necessarily a stable/steady one, at least not yet, thus not preventing at 10% unemployment rate by early 2010.

The key "link" is the US economy's over-reliance on private consumption (2/3 of GNP) and the correlation between the state of the housing market and its mortgages and jobs. If unemployment comes down, that will affect the housing market in a positive way as well as consumer spending, if the housing market continues to be in bad shape, that will continue to affect consumer spending and jobs. Can a third factor, eg the stimulus spending or something else (what?) "break" this "vicious circle"?

Reminder: In Q1 of this year, the US economy shrank by an annual rate of 5.7%

US CPI in May

In May, the Consumer Price Index rose a mere 0.1%, which is lower than market expectations, in spite a 9.6% rise in oil prices. The resulting year-on-year CPI was -1.3%, the lowest in almost 60 years!

Monday, 15 June 2009

On social media (pop artistic comment)

video

"Living ur life in the social media"
A musical/pop artistic comment on social media, tele-presence, the online-virtual world, etc.

IMF's prediction for 2009 US GDP



The International Monetary Fund predicts that the US economy will shrink this year less than previously expected and will return to growth (positive GDP) by mid-2010.

Sunday, 14 June 2009

on tele-presence

Will tele-presence (2 or 3 dimensional) save the planet's environment, via reduction of transportation needs of people and thus CO2 emissions?

Or will it "virtualise" our lives?

change for change?

New technologies and new 'tools'. Do they lead to new behaviors?
And are these behaviors "win" (or even better, "win-win") in the medium term?

Food for thought

Friday, 12 June 2009

trade: multilateral vs bilateral agreements - systemics

Are free trade areas and unions and bilateral agreement undermining the multilateral system?

Or are they a potentially viable alternative to a shaky multilateral existing system (see recent events and dynamics)?

Food for thought

on Mercosur

Argentina, Brazil, Uruguay and Paraguay are the 4 members of Mercosur that was founded in 1991 and is still on its way to becoming a customs union - free trade area.

Key issues are the signing of a free trade agreement with the European Union and the solution of the double common external tariff charge issue (the issue of third country goods that enter one member of Mercosur and are then transported to another second; currently tariffs must be paid twice)

US retail sales up in May

US retail sales up 0.5% in May 2009 compared to May 2008

Thursday, 11 June 2009

US real estate stats and forecasts


RealtyTrac forecasts that approximately 4 million foreclosure filings will be made in 2009 on approx. 3.1 million households with loans, while in 2008 there were 3.1 million filings on approximately 2.4 million households. Compare these numbers with 800,000 filings on 550,000 households that take place in a "typical year"!

Based on RealtyTrac's estimates and statistics:

* Foreclosure filings declined 6% in May compared with the record high in April, but they were still 18% up compared with May 2008.
* There were almost 1 million foreclosure filings in the March-May three-month period, a record

* Failures of many seriously delinquent loans that had been put on hold during the moratoria promoted by the government have been thrown back into the foreclosure "market".

* On the other hand, the government's plans to ease loan modifications and refinancing have not been implemented long enough to affect foreclosures.
* 10% states accounted for about 77% of the total number of foreclosure actions in May. These are the states where sales and prices increased the most in the five-year housing boom in early 2000s

The latest "beige book" - report by the Fed, for the period from mid-April to mid-May, says that the New York, Philadelphia , Cleveland, Richmond, Chicago, Kansas City and San Francisco districts are reporting more home sales.

So, if unemployment continues to soar, this will prevent a rebounding of the real estate market.

A vicious circle that can or cannot be broken by the US government's measures?

Thus, less than a decade after the dotcom bubble bursting, the effects of the bursting of a housing bubble that was led by over construction in 10 states and the invention of those flaky "subprime loans" (based on disregard for systemic risks to the real estate market) have led to an economic and employment crisis (6 mil jobs lost in 18 months) that is rocking the US and global economy. O tempora!

US: the "pay czar"

The government has appointed a "pay czar" to review executive compensation packages for firms that have received government bail-outs.

Meanwhile, it is said that many banks wish to repay the loans/aid to the government in order to avoid its controls on them.

the US trade deficit in April



The US Trade Deficit in April:

The US trade deficit was USD 29.2bn in April, up 2.2% from USD 28.5bn in March.

US exports fell 2.3% to USD 121.1bn, the lowest since 2006.

US imports fell 1.4% to USD 150.3bn.

Trade Deficits with:

China: Up 7.3% to USD 16.8bn.
Japan: Up 23.5% to USD 3.2bn

European Union: Up 21% to USD 5.3 billion!

Wednesday, 10 June 2009

The small companies are the key

"stimulate this":

Until politicians and policy makers in the US, Europe, etc, start paying real attention to the real needs of small companies and the effect of bureaucracy, overlapping laws and regulations on these small "guys" in the "economic game" (national, regional, global), IMO real growth and employment will not happen, only "virtual" one.

just my opinion

Monday, 8 June 2009

Who will have the majority in the new European Parliament?

After the EP June 4-7 elections, this is te initial break down per group:

There are 91 MEPs who are not yet part of any group. Some of them may join existing groups or seek to form new political groups. That includes the 25 Tory MEPs who used to be part of the EPP but have declared their intention to form a new group. The rules for forming a group in the EP becomes stricter as of this, 2009-2014 term. This July, all political groups must include MEPs from at least seven Member States. The minimum number of Members required establishing a political group is 25. Thus the new group the Tories will form will have to include at least one MEP from 6 other countries, thus the group will have at leasr 25 + 6 = 31 members.

Why am I focusing on this? Read below.

The EPP (Group of the European People's Party) has now 265 seats (from 288).

That is the largest group, but does not have enough members to form a majority.


With 736 members in the 2009-2014 term, the majority in the EP is 50% +1 = 369 members.


ALDE (The Alliance of Liberals and Democrats for Europe) is now be composed of 80 MEPs (100 last term), kaing it the 3th largest group.


Thus can the EPP + ALDE form a majority?

Well 265 EPP + 80 ALDE = 345!

That is 369 - 345 = 24 short of a majority.

Well, add at least 31 members the new group that the Tories will form, and one has 345 + 31 = 376 members, ie a majority of (at least) 7!

But where are the allies of the Tories come from? I guess from the 66 other MEPs who are not yet members of a group!


The other groups:

The Socialist Group (PES) has 162 seats (from 215 seats)

The Group of the Greens/European Free Alliance has 51 members (from 43), forming the fourth largest group.

The Union for Europe of the Nations Group (UEN) has now 35 (from 44)

The Confederal Group of the European United Left - Nordic Green Left (GUE/NGL) has 33 seats (from 41)

The Independence/Democracy Group led by Nigel Farage has 19 (from 22 seats).


The exact make-up of the groups will not become clear until the first sitting of the new Plenary on July 14, when a new President and the Chairs of Committees will be elected. Based on the above, it looks like the EPP with ALDE and the group of the Tories will have the majority.

some post European Parliament elections thoughts

Some post-European Parliament elections thoughts:

* IMO the EU has to move, either forward or backwards, the current state makes no sense!

* Will EPP + ALDE have a majority in the new European Parliament?

* 44.4% voter turnout: how does that affect the political power of the EP vis-a-via the Council, 2009-2014?

*
IMO the EU needs better EU and national policies, less regulation, less red tape

* EU single market for Services: is there a need for an EU-wide minimum wage?

food for policy thought

Sunday, 7 June 2009

on de-regulation and on empowering the real economy

video

Will the US stimulus package be absorbed in time?

US Stimulus package

The Congressional Budget Office estimates that only $185 billion (23%) of the $787 billion stimulus package, will be spent this fiscal year. $399 billion will be spent next fiscal year and the rest, $203 billion, will be spent over the fiscal years 2011 to 2019.

US jobs in May

The new federal minimum wage kicks in July 24!

Meanwhile, the slowing down in the monthly net number of jobs in May, against predictions, to 345,000 ( April: 504,000 March: 652,000) provides further support to those who believe that the US economy is over the worst.

But the number of jobs lost, while quite smaller in May and the lowest since September 2008, is still quite high and 6 million jobs have been lost since late 2007. And the unemployment rate is the highest since 1983! It is 9.4% in May, from 8.9% in April.


the lost art of good conversation

"as the satisfactions of the body decay, my desire for the pleasures of good talk and my delight in them increase"

Cephalos
(from Plato's "Republic")

IMO in our efforts to overhaul our ways of life to a more sustainable format (eg less CO2 and materialism "hungry") yet one that remains rooted in our ways of life in the history if humankind, we need to rediscover the pleasures that Cephalos speaks of (both of them actually).

Food for thought!

Saturday, 6 June 2009

flashback to 2007: The end of the economic world as we know it?

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"?

On "Flexicurity"

Originally Written: 28/1/2008

Flexicurity, ie systems that give employers flexibility in firing (and thus an added incentive in hiring) while offering employees security (eg in Denmark via a comprehensive unemployment benefits and re-training system operated by state agencies, with a higher taxes trade off for companies) is still well in the EU's policy and political agenda, including that of the so called European Social Partners (BUSINESSEUROPE, ETUC, etc).

There are many types of flexicurity models. In Germany flexicurity allows companies to move employees to new posts. The Danish model was agreed by employers and trade unions at their own initiative and approved by government (on the taxes part, I guess).

On the need for a new Capitalism

Fr0m: Thursday, August 09, 2007

Re the "gut of the beast"

In banks we trust is the basic mantra of the existing version of the capitalist system.

It looks like that to deal with infamous by now "sub prime" crisis the policy makers in the US and Europe are doing a variety of things. One of them is to fortify/shield/protect the banking sector, a core element of the system, from a potential real or psychological fallout from the sub prime crisis.

Thus, on Thursday, the European Central Bank (ECB) said that it had moved quickly to "pump" 95bn Euros into the Eurozone 13's banking market, in the form of loans, an offer that was taken up by 49 banks and other financial institutions! Is one to assume that all these have important effects on the portfolios due to defaults in the US sub prime market?

To what extent did these high risk instruments penetrate or spread throughout the global financial/investment/banking/money system?

How much of the total portfolio did these high return high risk tools represent? And what is more, why? Is/was the financial world short of other "lucrative" investment opportunities? Was the inherent/expect risk of the sub prime not taken into account? These are IMO the tough questions about the state of the global capitalist and financial systemics in recent years!!!

The unusual move is the ECB's single largest intervention in the banking sector since the immediate aftermath of the 9/11 attacks on the US in 2001.

I am as capitalist as anyone, but these things do cause me major concerns not about the sub prime issue or its effects, but mostly, from a systemics and macro/global point of view about the current state of the fin/econ/social/political system as a whole.

Are we in need of a Capitalism 2008++ Release (ie new version)?
One that takes care of the bugs of the existing one and maybe introduces a new foundation, eg human capital?


Just a thought!

On the "purpose of life"

On the "purpose of life"

Some more syllogisms of mine from a recent philosophical discussion (philosophy on life):

Some people, indeed, are "trapped" in seeking purpose, they become "enslaved" by /prisoners of a purpose or by the seeking of - finding one.

It is like a teacher tells the pupils to write an essay on a topic of their own personal choosing, and most pupils insist that the teacher dictates a topic, they are unable or "lost" in finding one of their own. And if the teacher insists, they try to copy a topic from a fellow pupil or seek the nerd of the class and ask him for a topic ("gurus").

It is "funny" how in totalitarian states, "citizens" have "topics" forced upon them by a secular "teacher". And that in more liberal ones (eg USA), many people still cannot deal with "freedom" from secular "teachers" ("big brothers") and need a "divine" teacher to give them one, often in return for the promise/hope of life after death or even better, one in "heaven".

More widely, most peoples' mindsets, in all issues, seeks for ONE cause of things (from accidents to the creation of the universe). They seem unable or unwilling to fathom the concept of "dynamics" and "interplay of many forces/parameters/factors", be it in existential or daily life matters. There has to be a "causer" or someone in charge or someone responsible or "guilty" for everything that happens (even themselves). A "blame someone for everything"culture. And there has to exist motivation (eg in trials of people). That is why some prosecutors have to "devise" a simplistic causality "model" to better win their cases in front of many juries.

Whereas secular societies are founded on freedom within the sole confines of respect of Constitution and laws. Constitution and laws "govern" secular societies, not Presidents, Governors, etc. That is a concept many people miss.


Investing in the real economy

Investing in the real economy

Why was the impact of the US housing market's subprime financial risk outside the US underestimated? In other words, why did investors outside the US "buy in" so much into this high expected risk -high expected return investment tool? Are there not other attractive investment opportunities, both outside the US and in the US economy?

What happened to investment to real economic growth ops, more "business" or "entrepreneurial" ones?

Is there a global "entrepreneurial" deficit? Which affects investment options, employment opportunities, etc?


Written: Sept 5, 2007
Updated: June 6, 2009

Friday, 5 June 2009

Benefits and Costs from the UK's EU membership

No matter what will be the results of the June 4-7 European Parliament elections in the UK, the "Euro-scepticism" and "anti-EU" side is bound to remain very vocal.

Whereas the EU Treaty in force now does not provide a framework for the exit of a member state of the EU while the infamous Lisbon "candidate" treaty does (and that would mean that the "UK out of the EU" side should support the new Treaty), there are some data that point out that the UK's membership of the EU and its single market is quite "beneficial", to the UK, in terms of finances and in terms of jobs.

1) Exports to the rest of the EU:

60% of the UK's exports are to the rest of the EU (26 countries), in other words inside the famous/infamous "EU Single Market". If the UK was to leave the EU, then its products would not enjoy the benefits of a zero tariff - zero quota access to the French, German, and 24 other "national" markets.

2) Foreign Investments that bring in money and create jobs:

According to the 7th annual Ernst & Young Country Attractiveness Survey that was published yesterday (June 4, see
the official press release), whereas inward investment into Europe in 2008 was flat ("... demonstrating the global recession’s toll on investment projects into the region ..") " .. the UK retained its position as the most attractive destination for inward investment (FDI) in Europe in 2008 .

Note that the UK attracted 686 investment projects in 2008 which while 4% less than in 2007, created 20, 000 jobs (16% fewer than 2007), but ranking the UK as the number one location for FDI job creation in Europe!

How is that related to the "in or out of the EU" dilemma? Well, the data contained in another part of the press release indicate that " .. the largest investor in the UK remained the US (263 projects), followed by India (49), France (46), Germany (42) and Japan (30). Indian investment surged ahead of traditional investors, France and Germany, for only the second time in the last 12 years".

How much FDI a UK that was not part of the EU's Single Market would attract? That is the question, IMO! How many American projects instead of the 263 in 2008? Of the 30 Japanese? Let's assume that for India's investments in the UK are not EU related and leave the French and German investments in the UK out of the equation.

It is also noteworthy, IMO, that according to the survey, "France, Germany and Spain, which have been the most important countries for the attraction of foreign investment since 1997, remained top four countries."

The UK has more "flexible" labour laws which is attractive to foreign companies willing to do business in the EU. That was actually even more so until 1998:
In the Maastricht EU Treaty, the UK was allowed to opt out of a program for further social reform which was thus attached to the treaty as a "Social Protocol" and applied only to the rest of the member states. In 1997, the incoming Labour government announced that it would opt-in to social protocol and by April 1998 all measures containing a special UK 'opt out' had been revised to bring the UK labour law in line.Thus the way was opened, and the Amsterdam Treaty that came into effect on April 1st 1999 incorporated the 'Social Protocol' into the main body of the treaty.

But the issue remains: The UK via its more "free market" approach to labour relations, employment law etc markets itself to third country (non-EU) investors better than other EU member states. In other words, the UK benefits from its EU membership by being the No. 1 choice was foreign investors in the EU. Those benefits, which contribute to making London and the rest of the UK so "global" may be lost if the UK decides to leave the EU and thus location of a non-EU company's European HQs and manufacturing activities in the UK will not provide access to the EU's Single Market anymore.

Other parameters to consider:

a) Does WTO membership render the need to be part of EU's Single Market obsolete? IMO, no, because WTO based trade is not actually "free" of quotas and tariffs and thus a non-EU UK would not have the same access for its exports to the EU as it does now as a member of the EU.

b) Imports from the rest of the EU

c) The UK's contributions and receipts from the EU budget and their "externalities"

d) "Sovereignty" (in 2009 global terms and conditions) - aka "the directives from Brussels"


Wednesday, 3 June 2009

Anyone for Good News? (aka lost in Globalia)

A recent study says that a well known "Web 2.0" social network or medium seems more like a micro-publishing medium than a "community", in that a few % of the total participants "breadcast" most of the info/views.

We are flooded with so called "news" nowadays, are we not? News and opinions, it seems, with global TV channels/networks ( can count at least 6-7 international ones in English in my cable package, originating from different countries), news agencies, the Net and all its sources, mega, medium and mini, of info and opinion.

But:

a) is there a "market" for good news, or does the "news dogma" that bad news sells still in effect today in this info-mega-pluralistic world we live in (at least those of us who are "wired", side-note: even homeless people in California stay wired, it helps them stay connected with society they argue, a very very interesting "phenomenon", btw)? The global economic crisis continuing (like a daily reality show) "tsunami" of news, news from a major plane crash, etc etc etc. So, do we really "want" good news? Do we "need" them? IMO, we do (need and want) them, but ...

b) is there a market for "simpler" or less "complicated" (or less "mysterious") news? News that can be explained or understood in terms of their correlation with the "dynamics" or "the Whole"? Even economic-financial news and analyses seem to difficult to "explain" or relate to the "big picture", nowadays.

On the other hand, TV viewers around the world continue to be fascinated, it seeems, with "Ben" and the other fictional characters who are lost in an island and in time in a well known TV series.

Comments?

PS. A Reminder: Homer, the ancient guy who spoke/told the stories of the Iliad and Odyssey, was neither a newsperson or a historian (Iliad and Odyssey took place, in some form, a few centuries before him). In other words, no major news agency or TV channel was there to cover the events in Troy or traveled with (was embedded into) Ulysses' crew. On the other hand, later, some leaders did bring with them their own historians (Alexander, Julius, etc).

Tuesday, 2 June 2009

US consumption in April

In spite of the increase in personal income 0.5% (driven by stimulus package, tax cuts and other policy measures), US consumer spending shrank by 0.1% on April (-0,3% in March).

Netlag and the e-globalisation fatigue syndrome

Messing up one's biological "clock" by internetting all over the world should be called "netjetlag" or "netlag" and should be considered one of the symptoms of what I have coined "globalisation fatigue syndrome" or, at least, its online version!!

Here is a pop art commentary re "NetLag":


video

Monday, 1 June 2009

US real estate situation


Partly driven by high unemployment, and in spite of various government measures to cut home loan rates etc, 12.07% of U.S. homeowners with a mortgage were either late paying or foreclosed at the end of Q1/2009, according to the Mortgage Bankers Association!

The economic and jobs situation has driven up foreclosures of the so called "prime fixed-rate loans". What is worth noting is that these loans are the loans made to the most credit-worthy borrowers and they make up 65% of the $9.9 trillion in outstanding first mortgages!

In Q1/2009, foreclosure actions were initiated on 1.37% of first mortgages, a record number!

All that in spite of the fact that the average rate on 30-year mortgages was 5.05% percent in January, 5.13%in February and 5.00% in March according to Freddie Mac, whereas a year earlier the average monthly rates were near 6%.

the importance of the European Parliament in the EU legislative process

How many EU citizens/voters know or realise not only that:

a) some 60% of national laws in the 27 are "made in the EU" but also

b) that while it is the EU Commission that drafts new EU legislative initiatives (bills), the European Parliament has co-decision (aka equal) power with the Council (of national Ministers) in amending and in rejecting or passing what the EU Commission has proposed in more policy areas than ever before (see "co-decision" policy areas)?

on thinking too much

Q: Can someone think too much about ... thinking too much?

This question was inspired by a post of a friend. I think it is a marvelous question, a philosophical one, actually (I specify: applied philosophy, but IMO "philosophy" is always applications/solutions oriented).

The Question, IMO, does not assume or imply that thinking too much is a bad thing, ie it does not "judge" the act of "thinking too much".

So, how much thinking can one do re thinking too much and could that qualify as much or too much? Thinking about thinking is not un-productive or "cyclical" per se. Any activity one does (and thinking IS an activity) should be evaluated from time to time with a view to better managing one's life and time.

to be continued ...

less materials more intellect? a strategic choice for humanity?

Is the future of the citizens of not only developed countries, but of humanity is general, a much less materialist and a much more intellectual one?

In other words, is sustainable human presence on this planet dependent on less manufacturing and its products and much more on the so called "intellectual products" (music, films, books, art in general, knowledge, etc)?

A bit advanced, I know, but food for thought!

CO2 curbing dilemma

CO2 emissions - carbon footprint:

Does humanity (or specific countries or regions) need manufacturing more or less than they need travel of people and transportation in general?

Food for thought

Systemics: self-sufficiency in 2009 (for countries)

Inspired by the GM issue, as well as other policy dilemmas and choices in the US, Germany, France, UK, the EU, OECD, WTO, etc:

What products and services does a country/economy in 2009 need self sufficiency in?

Do we need to rethink the relevant dogmae?

Is eg the appropriate level for EU member countries to achieve self-suffiency the EU one?
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