This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control.
One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
But for the moment, there are a lot of skeptics out there. Continue reading
Central bankers, anywhere in the world, are a cautious lot. They prefer slow and steady over the dramatic gesture. And they rarely go public with criticisms of other central banks.
But the economic stagnation of the major developed nations has driven central banks in the United States, Japan, Britain and the European Union to take increasingly aggressive action. Because governments are not taking steps to revive economies, like increasing spending or cutting taxes, the traditional concern of central bankers that economic growth will cause too much inflation has been supplanted by the fear that growth is not fast enough to prevent deflation, or falling prices. Continue reading
A beleagured President François Hollande went on the offensive today calling for an “economic government” for the Eurozone and “political union” in Europe within two years.
In a two hour press conference at the Elysee Palace, Mr Hollande announced a string of new initiatives including a four point plan for rapid progress towards a more federal Europe. Continue reading
A political, economic and demographic divide has opened up between France and Germany. And, if that were not trouble enough, a new Pew Research Center survey suggests that these two countries, which have for decades been the driving force behind European integration, increasingly see the world through different lenses.
The Franco-German alliance was based on rough equality between these two continental powers. In the 1980s, West Germany’s economy and population were slightly larger than France’s, but not overwhelmingly so, and French economic growth actually exceeded its neighbour’s. Continue reading
China has offered to help Russia rebuild its armed forces. China needs a strong ally and Russia needs help to become that kind of mighty ally. Currently China is more of a superpower than Russia. Chinese GDP is more than three times Russia’s and China is spending more than three times as much on defense as Russia (which is trying to maintain defense spending at 2.8 percent of GDP). Current Russian GDP is nearly $2 trillion, and 2.8 percent of that is $50 billion. The U.S. spends over three percent of a $15 trillion GDP on defense, but is reducing that a bit. Economy is destiny, as the Russians have learned. With recent spectacular economic growth in China, the Russians see the possibility of a return to the status of a major military power. At the moment China has twice as many troops and most of them have better weapons. But the cost fixing this appears to be more than the Russians can afford. China is offering to help by spending billions more on Russian weapons (despite the flagrant Chinese theft of Russian military tech). As distasteful as the situation is, the Russians really do need some help. The Russians are also becoming aware that they were not much of a superpower back in the Soviet days. Continue reading
KABUL (AP) – China, long a bystander to the conflict in Afghanistan, is stepping up its involvement as U.S.-led forces prepare to withdraw, attracted by the country’s vast mineral resources but concerned that any post-2014 chaos could embolden Islamist insurgents in its own territory.
Cheered on by the U.S. and other Western governments, which see Asia’s giant as a potentially stabilizing force, China could prove the ultimate winner in Afghanistan – having shed no blood and not much aid. Continue reading
A deeply troubled Europe faces two years of even weaker-than-expected economic growth that will lack the heft to ease its high jobless rates.
The European Central Bank now sees the euro zone economy contracting by 0.5 per cent this year, slightly worse than its original projection of 0.4 per cent. The new 2013 forecast for the 17-nation group calls for a contraction of 0.3 per cent, compared with an earlier projection of 0.5-per-cent growth, while 2014 would see growth of 1 per cent. Continue reading