Category: Countries & Regions

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After China, Fund Chief Goes to Japan – WSJ.com

On Friday, Chinese and European officials sought to play down expectations about when and how China may deploy its vast financial resources to help bail out indebted countries in Europe.

A Chinese Vice Finance Minister said China must first see the details of a new European bailout fund before making any commitments. “We of course must wait until its structure is extremely clear,” Zhu Guangyao told a press briefing. “And moreover, this investment must be decided on after serious, technical discussions.”

Mr. Regling told reporters he doesn’t expect “any precise outcome” from his visit to China and said “it’s too early to say what kind of amounts might be envisioned.”

…..Mr. Regling dismissed suggestions that European leaders will be forced to offer concessions to China in return for investment. “I am not here to discuss concessions,” he said, noting that China already buys EFSF bonds and gets no special considerations.

via After China, Fund Chief Goes to Japan – WSJ.com.

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Income Excluding Government Transfers Drops Again – Real Time Economics – WSJ

Friday’s Commerce Department report shows that personal income indicator has declined for three consecutive months — at a 2% annual rate. In the past, such steep drops in that category have been followed, three-quarters of the time, by a recession, according to Mr. Rosenberg’s [David Rosenberg of Gluskin Sheff & Associates Inc.] research. So while consumers boosted spending in the third quarter, they pulled it off by dipping into their savings and spending government dollars, not by earning more money at work. Mr. Rosenberg says stagnant wages, plunging consumer confidence, and low expectations for wage growth are a recipe for a dramatic drop in consumer spending in coming months.

via Income Excluding Government Transfers Drops Again – Real Time Economics – WSJ.

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SocGen: ECB will have to act – Ambrose Evans-Pritchard

Albert Edwards from Société Générale said the ECB will have to act, over a German veto if necessary. “The increasingly frenzied attempts of eurozone governments to persuade financial markets that they can draw a line under this crisis will ultimately fail.”

“The impending threat of a euro break-up will force the ECB to begin printing money, very reluctantly joining the global QE party. The question is whether Germany will leave the eurozone in the face of such monetary debauchery,” he said.

via Europe’s rescue euphoria threatened as Portugal enters ‘Grecian vortex’ – Telegraph.

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China spoils the party – macrobusiness.com.au

From the FT:

Chinese metals companies, lynchpins in the global economy, are warning that Beijing’s monetary tightening has gone too far, causing domestic customers to delay orders and raising the risk of payment default.

In one of the clearest signs yet of deteriorating sentiment, Baosteel, China’s second-largest steel producer, has told the Financial Times that its customers were pushing back scheduled deliveries “due to declining economic growth and tightening credit”.

via China spoils the party – macrobusiness.com.au | macrobusiness.com.au.

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BOE’s Monetary Gamble Nears Its Endgame – WSJ.com

So where once investors worried that it [the Bank of England] had got policy plain wrong, there’s now a chance they’ll start to fear that the bank has got things all too right, after all, and that the U.K. really does need policy settings appropriate for an economic ice age……

And a government focused on austerity measures is in no position to offer fiscal support even if it wanted to, and, according to the treasury’s pronouncements, it doesn’t. It’s sticking with the deficit-cutting plan A, come what may.

So this is clearly an economy with huge problems anywhere you might care to look. Its remaining cardinal virtue, perhaps, is that it isn’t in the euro zone, so the bloc’s more pressing concerns have shielded it from harsher scrutiny. It can’t rely on that shield for all time.

via BOE’s Monetary Gamble Nears Its Endgame – WSJ.com.

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Eurozone debt deal tackles symptoms, not cause | Investing | Financial Post

Eurozone leaders are as far as ever from finding a lasting solution to the bloc’s underlying problem of economic divergence, despite their latest progress in managing the symptoms of its debt crisis……

“This is another step in the right direction, but it is not enough to get us to the end game,” said Stephane Deo, chief European economist at UBS. “It buys time but it does not address the fundamental problem of the sovereign debt crisis.”

via Eurozone debt deal tackles symptoms, not cause | Investing | Financial Post.

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With focus on Europe, lack of U.S. debt progress slips under radar | Economy | News | Financial Post

Following a month where markets have locked on to developments in Europe, the lack of progress from the so-called U.S. Super Committee on debt has flown under the radar, an analyst warned Thursday.

Douglas Borthwick, managing director at Faros Trading, LLC, said in his latest report that U.S. debt troubles will likely take centre stage once again in the coming months.

“We argue that while Europe is dealing with their fiscal issues, we have yet to hear from the ‘Super Committee’ set up by the U.S. congress to find ways to decrease spending in the longer term,” he said.

via With focus on Europe, lack of U.S. debt progress slips under radar | Economy | News | Financial Post.

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Here’s What Will Happen When China’s Bubble Bursts

What would a China slowdown mean for the rest of us? In the main, three things will become evident.

  • First, China will remain committed to letting its currency, the yuan, rise in international foreign-exchange markets. A stronger currency will encourage companies to rely less on exports and more on goods and services consumed domestically.
  • Second, Chinese products will no longer be the cheapest on the shelves in years to come because China’s inflation rate will rise along with its wages. This is natural when any nation climbs a rung on the development ladder, which is what China is now doing.
  • Third, the Chinese market for raw materials and heavy equipment—cranes, bulldozers, factory machinery—will slow….

via Here’s What Will Happen When China’s Bubble Bursts.

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