ECB president Mario Draghi has expressed strong support for a "currency
commissioner", saying it would strengthen the euro.Spanish prime minister
Mariano Rajoy has criticised the suggestion that eurozone
countries should surrender sovereignty and agree to the creation of a European
Commissioner with new powers over national budgets of euro countries. Speaking at a press conference with Mario Monti, Italy's leader, in Madrid,
Rajoy argued that this was only acceptable as part of a full package of closer
integration.
Rajoy said:
This is an idea, that considered on its own, I personally don't like. As part
of a variety of measures for fiscal union, it could be considered.
The Bank of Israel has surprised the markets by
cutting interest rates by a quarter-point, to 2%.
The Bank of Israel made the move after concluding that
Israel's economy could struggle in early 2013 – and cited the eurozone crisis as
a key factor...In a statement, it said:
Against the background of the debt crisis in Europe, the level of economic
risk from around the world remains high, and with it the concerns over negative
effects on the local economy.
It's the latest in a string of rate cuts by central banks around the globe,
as concern has grown about the world economy.
None of the economists surveyed by Bloomberg had expected a cut, and the move
has sent the shekel falling against the dollar.
Israeli shekel drops as central bank unexpectedly lops 25 BP off interest
rate, taking it to 2%.
7 comments:
Beijing is taking no risks as the Communist Party gathers for the 10-year power transition next week, the biggest turnover of top cadres since the revolution.
The People’s Bank has injected a record $61bn (£38bn) into the financial system over the past four days, loosening monetary policy. Zhiwei Zhang from Nomura expects a “sharp rebound” this quarter as companies rebuild depleted inventories, fuelled by loan growth of $250bn a month and double-digit rises in industrial sales.
A similar picture is emerging in Taiwan, Korea, India, Indonesia and Australia, where data seem to have either stabilised or begun to turn the corner.
David Bloom, currency chief at HSBC, said the Chinese growth scare of the past year has been greatly exaggerated. “People have been overly bearish about China, and now they realise they were wrong. It is clear that the country is not weakening dramatically after all. China remains a fantastic economic story.”
José Ursúa, from Goldman Sachs, says China, India and Brazil are still only halfway through their catch-up phase. They will eventually face a “structural slowdown” as per capita income approaches $15,000 to $25,000 – a variant of what the World Bank calls the “middle income trap” – but there should be another cycle of torrid growth before that crisis hits.
Yet opinions remain starkly divided on prospects for China, now the beating heart of the Asian economy. Critics say the most recent phase of China’s boom was driven by loan growth, nearly 100pc of GDP over five years.
Professor Michael Pettis, from Beijing University, said that China has surpassed the excesses of Japan’s Nikkei bubble in the 1980s. “The major difference is that Japan never took debt, investment and consumption imbalances to anywhere near the levels that China has taken them,” he said.
Credit leaked into property spirals in east coast cities. Much went into industrial plant, pushing investment to a world record 49pc of GDP. This has left a legacy of overcapacity. Most of the country’s shipyards and solar companies are insolvent.
Mr Pettis expects China’s growth rate to halve to 4pc over the next decade as the hangover lingers. This would be a major shock to expectations.
China has clearly picked the low-hanging fruit from catch-up growth. The World Bank and Chinese reformers say the export model of the past 30 years is exhausted, but it is no easy task to shift gear and break vested interests.
The debate will rage on over whether China’s mini-slump this year has been a cyclical hiccup or the start of a deeper malaise, but for now there is no denying the power of monetary and fiscal stimulus.
The International Monetary Fund warned over the summer that the world economy was in danger of an “adverse feedback loop” with all major regions stalling at the same time, risking a repeat of 2008.
The trade data from Asia have allayed one huge concern but the US fiscal cliff and Europe’s debt crisis have still to be navigated.
Manufacturing and construction survey data published over the next couple of days should give a clearer picture of the economy's trajectory than the confusing response of consumers reported earlier this week.
According to the consumer surveys, we are spending more in the shops and borrowing more on unsecured credit than at any time since the beginning of the year.
But the surveys also said consumer confidence in the outlook for the economy had fallen. Worse, some economists argue the extra borrowing was all about desperate consumers adding to their debts just to buy food and clothes – not to splash out in joy at the country leaving recession. (OK: the consumer/retail surveys were carried out before ONS figures showed the recession was over, but you get the point). And, as my colleague Larry Elliott has pointed out, the upturn in borrowing is still from historically low levels.
Ive been waiting so long for a good bit of news,
Whilst Gidiot clings to austerity views,
Food more expensive petrol a theft,
Oh how Id love to kick George in the cleft.
But then came the word of a sliver of growth,
Even distracted Rowsons well drawn sloth,
If only it wasn’t an Olympic fix,
A butch and double dip accounting trick.
And so once more we begin to sup,
From Georges foul depression cup,
The fat cats are rats making money from blood,
More destructive than the New York flood.
As they sit back and snigger about paying no tax,
Whilst the give the Nurses and Teachers the sack,
Away with their trust funds to the isle of corfu,
Away from the plebs like me or you.
So as old people sit in the dark this night,
Scared not of monsters but the cost of light,
The sick and disabled the weak and the poor,
Hear the sneer well just cut some more,
Even Dave goes red at this wanton destruction,
On the people of this once proud nation,
Until the day of a general election,
You'll pay you bastards for a triple dip recession.
Ive been waiting so long for a good bit of news,
Whilst Gidiot clings to austerity views,
Food more expensive petrol a theft,
Oh how Id love to kick George in the cleft.
But then came the word of a sliver of growth,
Even distracted Rowsons well drawn sloth,
If only it wasn’t an Olympic fix,
A butch and double dip accounting trick.
And so once more we begin to sup,
From Georges foul depression cup,
The fat cats are rats making money from blood,
More destructive than the New York flood.
As they sit back and snigger about paying no tax,
Whilst the give the Nurses and Teachers the sack,
Away with their trust funds to the isle of corfu,
Away from the plebs like me or you.
So as old people sit in the dark this night,
Scared not of monsters but the cost of light,
The sick and disabled the weak and the poor,
Hear the sneer well just cut some more,
Even Dave goes red at this wanton destruction,
On the people of this once proud nation,
Until the day of a general election,
You'll pay you bastards for a triple dip recession.
But if falling GDP between October and December were followed by another three months of contraction, it would give the UK the dubious honour of being the first western nation to suffer three recessions since the financial crash.
Who gives a shit about triple-dip recession? It's all one big recession with occasional upturns. Surely the real measure is peak to trough change in GDP or, much more importantly, living standards. The UK may have a triple, quadruple or quintuple dip recession, but it's still a lot better off than other countries in terms of loss of GDP and living standards as the recession are fairly small now. What we are really seeing is stagnation. Small recessions, small growth. Basically going nowhere quickly.
Some economists explain the rise in employment as a simple trade-off between capital and labour.
That's because they won't let go of their marginal beliefs. In economists mind it is easy to use a tenth of a person.
Businesses are holding labour in reserve as additional capacity in expectation of an upswing. The problem with skill specialisation is that you have to hold onto that specialist even if you can't use them at full capacity.
That explains the productivity drop. Hours worked may be up, but output is down. That's because labour hours consumed does not necessarily translate into hours of labour services used in production.
Businesses have tons of capacity spare and are sitting on billions of savings. The only investment going on is required capital replacement because there isn't the demand to justify anything else.
Dialogue with entrepreneurs in Romania
Posted on October 23, 2012 by aheyer
ALDE took its “Boost SME’s campaign to Bucharest this month! On 17 October, we held a conference with 150 Romanian entrepreneurs in order to promote the aims of our campaign and to learn more about the needs of local SMEs. The event focused on the access to finance, widely considered as a major problem for SMEs.
After an introduction by ALDE group leader Guy Verhofstadt, several speakers on the first panel on the regulatory action to improve access to finance gave a positive outlook on a better funding of programmes for SMEs, namely the EU Commissioner in charge Antonio Tajani, his DG’s expert for financial instruments, Julien Guerrier, and the Romanian SME minister Mihai Voicu. The second panel on the access to finance in practice unveiled, in a lively exchange with the entrepreneurs, some major deficits on the practical side, which were mainly answered by Florin Dănescu as Executive President of the Romanian Banks Association.
From ALDE, the conference united Guy Verhofstadt, Philippe De Backer, Jürgen Creutzmann and Cristian Busoi as speakers. Phil Bennion, Norica Nicolai and Jan Mulder also attended the event.
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