Subscribe free to our newsletters via your
. Solar Energy News .




POLITICAL ECONOMY
Walker's World: Running on flat
by Martin Walker
Paris (UPI) Jul 9, 2012


disclaimer: image is for illustration purposes only

Only an idiot would try to predict whether U.S. President Barack Obama can get re-elected four months from now. But it would take a special kind of fool to deny that the latest economic news has made his task significantly more difficult.

Understandably, commentators in the United States have focused on the dismal job figures that emerged Friday. Adding 80,000 jobs in June doesn't even keep pace with demographic growth but it is worth noting that the balance of the economy is improving. The Midwest and central states are doing relatively better, manufacturing employment is showing promise and there are almost half a million fewer government employees than when Obama was elected.

The really grim news comes from overseas where everywhere is slowing at once. New export orders in China fell at their sharpest rate since the recession hit three years ago as import demand fell in both Europe and North America. Local governments are running into their own financing problems and have started selling off those fleets of new BMWs they bought in a burst of over-confidence last year.

New business and new orders both fell in Japan in June. India has stalled. Australia, which has until recently been booming on exports to China, is seeing those Chinese orders drop and seems to be running into its own subprime mortgage problem. In Brazil, both manufacturing and new orders are falling at the fastest rate in eight months.

Europe is the real problem. In Germany, the regional economic powerhouse, output fell at the fastest rate in three years. Export orders have tanked. Only in Greece did export orders decline faster than they did in Germany. Output also fell in Italy, Spain and France in both manufacturing and in services.

So after all the heroic measures by central banks in creating trillions of dollars in new liquidity and the ridiculously low interest rates and all the deficit spending by governments, the global economy is limping along somewhere between flat and low-growth. This isn't where we should be after a recession, particularly with so much pent-up demand in emergent markets.

It also means that there is zero chance of any significant upturn in the U.S. economy for Obama to brag about in his re-election campaign. His boast of doubling U.S exports by 2015 looks particularly hollow, since the world's export markets are best sluggish. Still, with help from the shale natural gas boom and its spinoff effect in petrochemicals, the U.S. economy looks almost healthy by comparison with other developed economies.

"We're the best-looking horse in the glue factory," quipped Doug Holtz-Eakin, a prominent conservative economist who served on the White House Council of Economic Advisers and as head of the Congressional Budget Office. He was speaking at a meeting of the International Accounting Standards Board, where global director, Hans Hoogervorst, summed up the mood by saying, "The best we can hope for is prolonged muddling-through."

The chances of just muddling through looked slim, after yet another "rescue" of the euro at yet another European summit turned out to be yet another damp squib.

With great fanfare and declarations that Germany's Angela Merkel had at last given way, France, Italy and Spain hailed an undated and vague undertaking that Spain's banks could directly tap the euro's pre-agreed bailout funds. The interest rate on Spain's bonds accordingly fell back to an eye-watering 6 percent rather than the lethal 7 percent. That is the rate at which Spain will no longer be able to borrow, the rate that signaled surrender to Greece and Ireland when they had to throw themselves on the less than tender mercies of the European rescue mechanism.

Now the Spanish and Italian rates are creeping back up again. Indeed, Spain's 10-year bonds topped 7 percent again briefly Friday so the markets are evidently not buying the story of a euro rescue. Italy's rates are more than 6 percent again and France was last week hit with unpleasant but not unexpected news; to reach its budgetary targets, President Francois Hollande's new center-left government will have to cut another $49.4 billion from public spending over the next two years.

The best summary of the current euro situation came from Alaska financial analyst Mike Shedlock, who put it this way: "One, the Bundesbank said there should be no banking union until there is a fiscal union. Two, Angela Merkel said that there should be no fiscal union until there is political union. Three, Francois Hollande said that there should be no political union until there is a banking union. And four, the German supreme court will not allow a political union nor a fiscal union, nor a banking union without a German referendum."

None of this means that Obama cannot get re-elected. But he won't be re-elected on a wave of economic recovery and confidence. We shall be lucky if the world simply runs flat for the rest of the year.

.


Related Links
The Economy






Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle








POLITICAL ECONOMY
China's inflation slows to 29-month low
Beijing (AFP) July 9, 2012
China's inflation slowed in June to its lowest level in 29 months, official data showed Monday, giving the government more flexibility in its efforts to reboot the world's second-biggest economy. The country's consumer price index (CPI) rose by 2.2 percent year-on-year in June, the National Bureau of Statistics said, down from 3.0 percent in May and the lowest figure since January 2010. ... read more


POLITICAL ECONOMY
Denmark can triple its biomass production and improve the environment

Researchers tap into genetic reservoir of heat-loving bacteria

Prairie cordgrass: Highly underrated

New loo turns poo into power

POLITICAL ECONOMY
Biomechanical legs are a giant step for robot-kind

Most accurate robotic legs mimic human walking gait

Muscle-like action allows camera to mimic human eye movement

Falling lizards use tail for mid-air twist, inspiring lizard-like 'RightingBot'

POLITICAL ECONOMY
U.S moves massive wind farm plan forward

Belgium wind farm a go after EIB loan

Opponents force Wales wind farm hearings

Toward super-size wind turbines: Bigger wind turbines do make greener electricity

POLITICAL ECONOMY
Sharing data links in networks of cars

Moody's upgrades Nissan credit rating

US goes to WTO over China auto duties

US Big Three automakers score solid sales in June

POLITICAL ECONOMY
Iran works to foil insurance embargo on oil

Tutu pleads for peace on eve of South Sudan anniversary

ASEAN reaches out to Beijing over South China Sea code

Rio bay fisherfolk in deadly feud over oil complex

POLITICAL ECONOMY
Swiss nuclear safety watchdog gives stations the all-clear

Canada nuclear scientists strike

Japan reactor back to full power after nuke shutdown

Reactor at Bulgarian nuclear plant shut down

POLITICAL ECONOMY
Europe grid upgrades pegged at $128B

Clean cookstoves unaffordable to Bangladeshi women

Swiss firm wins $120m power station contract in Iraq

New clean energy bank to turbo-charge investment

POLITICAL ECONOMY
Taiwan indicts loggers for axing 2000-year-old trees

Study Slashes Deforestation Carbon Emission Estimate

Scientists develop first satellite deforestation tracker for whole of Latin America

Scientists reconstruct pre-Columbian human effects on the Amazon Basin




The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement