Economic countdown to the Olympics

13th July 2012

[Podcast] Private equity in China: from sailing to rowing

 

17 thoughts on “Economic countdown to the Olympics”

  1. James says:

    Very interesting to have this analysis straight after yesterday’s one about the UK.
    I would say that the nastiest bit for France remains that very unpleasant “sustained loss of competitivity”. Just like Italy et al, the terms of trade against Germany have turned very sour over the life of the Euro.
    A 1-2% worsening a year in productivity etc against germany adds up after ten years and is very hard to reverse (unless you go down the let’s cut everyone’s salary route of Greece/Ireland).
    And, needless to say, the other theme is the bank lending figures. which don’t promise much help for the economy ( a common theme).
    All we need is for the Euro politicians to say that France is “on track” and we will then know that a disaster is around the corner.

    1. Anonymous says:

      Hi James
      As soon as I looked through the numbers I thought that France cheek by jowl with the UK would be of interest. I am sure someone will tell us that France is “on track” soon.

  2. Anonymous says:

    I watch the torrent of bad news from Euro land and yet still the pound gets hammered. I thought you might find this linked article interesting:

    http://www.economonitor.com/edwardhugh/2013/03/12/when-is-a-promise-not-a-promise/

    1. DaveS says:

      Very interesting stuff.

      As I see it, we are in a new monetary world of unlimited debt monetisation. Its happening in Japan, the US with QE to infinity and its happening in the UK. It will happen in Europe – it seems from the economonitor article that the ECB might simply turn a blind eye to the Eurozone central banks monetising their own debt.

      The stock markets are ignoring all the negative economic news because it doesn’t matter any more. They were afraid the ECB (the Gernans) might spoil the party – that won’t happen and now they know it. The central bankers will flood the world with printed money and they won’t stop. The worse the underlying economy, the more they print. The markets and the wealthy can’t lose.

      As James points out above, the bankrupt democracies simply can’t stop running deficits – globalisation and demographics just make it worse year by year. If the central bankers don’t monetise the deficits then its game over – the debt is too big to fund so its bank/sovereign/national default. If one big country defaults – they all will.

      We are about to inflate to infinity – and on a global scale. Of course the pretence is that this is temporary stimulus until we get back to “normal”.

      A deficit nation inflating in isolation wouldn’t last long..But inflating together ?- thats a whole new world and we are about to find out what it looks like, Hyperinflation on a global scale ?

    2. Anonymous says:

      Hi pavlaki

      I went to a talk by Edward Hugh at the LSE a couple of years ago. Actually the Promissory Notes have been a very Irish story and I mean that in all senses of the word! Whilst yes there is monetary financing here it also is a way of ending the ELA by the Central Bank of Ireland which is also monetary financing. As it is a reminder that the ECB is not a full central bank I believe then they too had a reason to overlook this.

      Meanwhile lost in the Pope and Champions League news today the Irish issued some 5 billion Euros of a ten-year bond at 4.15%….

  3. Justathought says:

    Hi Shaun,

    Very good analysis as usual,

    Indeed, I have to point out that France is heading for worse; her government is making plan to reduce from 56% of GDP consumption to 53 % by the following year. What is worrying is according to the latest paper from Global Finance (the world 50 safest banks)is pointing out only three French banks… http://cdn.gfmag.com/images/stories/attachments 140_SafestApril2013_.pdf
    …(It seems that the Greek “bailout” to save France’s banks was short lived…) and of course a forecasted deficit of 3.7 % for 2013. When we know that the deficit target for 2014 should be at 2.5%.

    Is France the next domino to fall? I won’t be surprise and I do hope that if it’s the case the “ZeroZone” the way we know it actually will disappear and a return to the free common market will prevail including citizenry sovereignty. With English as the main International and “European” Language while preserving regional one

  4. Justathought says:

    Hi Shaun,

    Very good analysis as usual,

    Indeed, I have to point out that France is heading for worse; her government is making plan to reduce from 56% of GDP consumption to 53 % by the following year. What is worrying is according to the latest paper from Global Finance (the world 50 safest banks)is pointing out only three French banks… http://cdn.gfmag.com/images/stories/attachments /140_SafestApril2013_.pdf
    …(It seems that the Greek “bailout” to save France’s banks was short lived…) and of course a forecasted deficit of 3.7 % for 2013. When we know that the deficit target for 2014 should be at 2.5%.

    Is France the next domino to fall? I won’t be surprise and I do hope that if it’s the case the “ZeroZone” the way we know it actually will disappear and a return to the free common market will prevail including citizenry sovereignty. With English as the main International and “European” language while preserving regional one

      1. Anonymous says:

        Hi Justathought
        Thanks for the list. I have to confess I had to look up number 7 to see that it is linked to the French Parliament. Only 2 UK banks on the list and they do their best to do their trade elsewhere….
        I wonder if this list will be remembered more fondly than some of the others! “Anglo-Irish is the best bank in the world” (Oilver Wyman)

  5. JW says:

    Hi Shaun

    The French CB will be supported by the ECB. QE infinity everywhere. BoE had to pause for a bit because it was leading the pack, normal service resumed shortly.
    Cue academy award winning title music of ‘Its a Mad, Mad, Mad, Mad World’

    1. Anonymous says:

      Hi JW
      I agree that the next move in the global game of chess is due from the ECB. But we see as many stutters as starts as last nights confusion in Japan over BoJ oppointments indicates. Also they will have to think hard to find something that the Bundesbank will approve of.

  6. Alex says:

    I’d like to nominate Rage Against the Machine as todays song lyrics from their track Bombtrack… just a shame they didn’t call it ‘on track’….

    Ughh! hey you, it’s just another bombtrack
    ughh
    Hey you, it’s just another bombtrack
    yeah
    It goes a-one, two three
    and
    It’s just another bombtrack

    And suckas be thinkin’ that they can fake this

    But I’m gonna drop it at a higher level

    ‘Cause I’m inclined to stoop down

    Hand out some beat-downs

    Cold runna train on punk ho’s that

    Think they run the game

    But I learned to burn that bridge and delete

    Those who compete at a level that’s obsolete

    Instead I warm my hands upon the flames of the flag

    As I recall our downfall

    And the business that burned us all

    See through the news and the views that twist reality

    Enough I call the bluff

    1. Anonymous says:

      Hi Alex
      Actually I think their name does it and we could do with a bit of “Rage against the Machine” if we could manage it with nobody being physically hurt.

  7. James says:

    One other theme which links the Uk, France and every other democracy is the inability of leaders to cut anything and retain any form of popular support. Apparently, Hollande’s ratings are already the worst for a French president because he was unable to wave a magic wand and painlessly solve the French deficit issue.

  8. Midge says:

    Hi Shaun Always looked likely that France would run into trouble especially with Mr Hollande as president.Actions he has taken has been seen as ante business.Lowering the retirement age partly funded by higher employer contributions was one example.His spat with ArcelorMittal and his threat to nationalize the steel works was another.I believe France has been in complete denial.
    The January Greek Industrial ouput figures has vindicated everthing you have blogged on Greece recently. Yesterday’s television report said to get further aid Greece would have to cut the public service by 150,000 staff by 2015.If this where to come about could this be the tipping point?

    1. Anonymous says:

      Hi Midge
      Thank you re: Greece. It is a story that is very upsetting if you think of all the suffering which is taking place and that much of it was not necessary. However whilst I would love to see signs of improvement they are simply not there. This is quite an (anti) achievement as by now in any “normal” situation there would have been a natural recovery which they have prevented.
      Those analysts who have fed this by buying into recovery is just around the corner talk should be thoroughly ashamed of themselves. I think that they have delayed the tipping point which (as long as no-one is physically hurt) cannot come soon enough.

  9. Michael says:

    Hi Shaun,

    Can you really say that France is back to 1993 levels of production if the numbers were rebased to 100 in 2010? Surely the 97.3 of now doesn’t really equal the 97.1 output of then? Or am I missing something?

    Thanks

    Michael

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