analysts expect Apple to sell about 8 million iPhone 5 units in the final three months of the year. If the phone sells for around $600, with about $200 of it counted as imported components, then $400 per phone would figure into the government’s measure of gross domestic product...... The new iPhone sales could boost GDP by $3.2 billion in the fourth quarter, or $12.8 billion at an annual rate. That is an increase of 0.33 percentage point in the annualized rate of GDP growth. It could be even higher, he says. Even a third of a percentage point would limit the downside risk to J.P. Morgan’s fourth-quarter growth projection of 2%. ..... forecasts for third-quarter GDP growth to 1.5% and the fourth quarter to 1.4%, both down seven-tenths of a percentage point, largely due to the effect of the drought on farm output. ..... The economy grew at a 2% pace in the first quarter of this year, then slowed to 1.7% in the second quarter. In the final three months of last year, the U.S. economy expanded at a 4.1% pace after a sharp slowdown earlier in the year.
I think it is extremely possible. The 2008 fiasco was a policy failure on a massive scale. The 2008 fiasco was preventable. The 2008 fiasco was stupidity run amok, on Wall Street and on Capitol Hill. Main Street paid the price, and continues to do so. In any other industry the fiasco would have given rise to a whole new generation of innovative companies. The rules in finance are obviously not market friendly enough.
It was like somebody (at home) bombed the interstate highways. The basic fabric of finance lay in tatters.
China is on its way to becoming the leading economy in the world by 2016. But that is based on PPP (Purchasing Power Parity) and that is a country with four times as many people as America. And a lot of that growth is coming from playing catch up with America. America still shows signs of coming up with the industries of tomorrow. I think the explanation is simple. A country that celebrates free speech will beat a country that does not celebrate free speech any day when it comes to cutting edge innovation.
Yes but of course America could hit 5% growth rates. The Great Recession could have been avoided, if only the people on Wall Street and on Capitol Hill had been doing their job.
Unemployment is stuck above 8% and growth probably slipped below an annualised 2% in the first half of this year. Ahead lie the threats of a euro break-up, a slowdown in China and the “fiscal cliff”, a withering year-end combination of tax increases and spending cuts...... Led by its inventive private sector, the economy is remaking itself. Old weaknesses are being remedied and new strengths discovered, with an agility that has much to teach stagnant Europe and dirigiste Asia. ..... America’s sluggishness stems above all from pre-crisis excesses ..... Until 2008 growth relied too heavily on consumer spending and house-buying, both of them financed by foreign savings channelled through an undercapitalised financial system. Household debt, already nearly 100% of income in 2000, reached 133% in 2007. Recoveries from debt-driven busts always take years, as households and banks repair their balance-sheets. ...... in the past three years that repair has proceeded fast. America’s houses are now among the world’s most undervalued: 19% below fair value ..... because the Treasury and other regulators, unlike their euro-zone counterparts, chose to confront the rot in their financial system quickly, American banks have had to write off debts and raise equity faster than their peers. (Citigroup alone has flushed through some $143 billion of loan losses; no euro-zone bank has set aside more than $30 billion.) American capital ratios are among the world’s highest. And consumers have cut back, too: debts are now 114% of income. ..... a richer China has become the third-largest market for America’s exports, up 53% since 2007 ...... a growing “app economy”, nurtured by Facebook, Apple and Google, which employs more than 300,000 people; its games, virtual merchandise and so on sell effortlessly across borders .... even small companies are seeking a toehold in emerging markets ..... Many countries have shale gas, but, as it did with the internet revolution, America leads in exploiting it ...... Even the most productive start-ups cannot help an economy held back by dilapidated roads, the world’s most expensive health system, underachieving union-dominated schools and a Byzantine immigration system that deprives companies of the world’s best talent
American companies have left their mark all over Shanghai’s skyline..... Five of America’s biggest banks wrote off almost $500 billion in the aftermath of the financial crisis and raised $318 billion in fresh capital. As a result, their equity ratios now exceed 10%—above both pre-crisis levels and those of euro-zone banks. ...... Consumers are now engaged in a long, hard process of shedding debt and learning to live within their means. .... an uncommonly feeble recovery. In the three years since the recession ended, GDP has grown by an average of 2.4%. ..... With many old mortgages defaulted on and written off, and new ones harder to get, debt burdens have shrunk considerably. ..... two things beyond America’s control: the slowing world economy and the rising price of oil, America’s largest import. ..... Sales to traditional markets in the OECD, a rich-world club, have risen 20% since the end of 2007. But they have risen 51% to Latin America and 53% to China, which is now America’s third-largest market after Canada and Mexico. ..... Services have long been an American strength, consistently making up 30% of its exports. ..... scientific, engineering and other consulting, plus financial services .... Exports of such services to Brazil, India and China nearly doubled between 2006 and 2010. .... This trend has been pushed on by digital technology, which makes effortless the sale of many services across borders. ..... Zynga, one of the largest makers of online games and mobile entertainment applications, recorded $1.1 billion in revenue last year, largely from the sales of virtual goods in its games. A third of this came from players who live outside America. ...... Manufacturing employment has risen steadily for two years now. ..... Traditionally, America’s largest companies, such as Boeing and Caterpillar, have dominated exports. Small companies find distribution, regulation and language barriers overwhelming in foreign countries. ...... Small companies (with fewer than 500 employees) accounted for 34% of exports in 2010, up from 29% in 2006. ..... Soaring grain exports have raised farmers’ incomes to record levels, and regulators fret about incipient bubbles in agricultural land. At the same time, surging oil prices have triggered a gusher of new output. ..... America is the world’s third-largest oil producer. ..... a bonanza of domestic gas. Americans pay less than $3 for 1m British thermal units, where Europeans and Asians often pay more than $10. ..... America’s most successful exporters employ relatively few people. .... Emerging markets may have survived the 2008 crisis largely unscathed, but their growth is now succumbing to their own financial excesses. Nor are they an easy place to make money. China’s government, in particular, often forces foreign companies to share with local partners the ideas that give them their competitive advantage
Image via WikipediaThe recovery is slow but sure. I would have liked something more dramatic, but good news is good news. I don't think it's fragile. I don't think next month we will be like, oops, we are going down again. The rise I think will be steady, although not a smooth steady. Much of it is about growth in jobs. People need work. And the economy simply has to come up with those jobs.
There has been some good news especially on the jobs front today.
A dramatic realignment that I was expecting did not happen. The stimulus bill of 2009 was not dramatic enough as far as I was concerned. But the president perhaps did what he could under the given political alignments.
BBC: US Federal Reserve cuts 2011 growth forecast: The Fed expects growth of 3-3.6% next year, down from its previous 3.5-4.2% estimate. .... the US economy grew faster than first thought in the third quarter of this year, at an annualised rate of 2.5%. ...... US Federal Reserve said it would buy $600bn (£373bn) of US government debts in order to try to lower long-term interest rates and thereby boost the economic recovery. ...... support for the move on the policy committee was almost unanimous, with only one member voting against. ..... among the positive effects of quantitative easing that they noted was a lower value in the dollar. ..... the unemployment rate remains stubbornly high at 9.6%.
There is not going to be a double dip recession. The Great Recession could easily have become the second Great Depression, but it didn't, thanks to the stimulus package. The banks are back in shape. Spending is going up. But the unemployment is still at European levels, and that is a big problem. It has to be brought down to something like 6%.
Image via WikipediaI have not followed the Fed's corner of the house as closely as the president's corner, but I get the impression the Fed put a trillion into real estate already and is about to put another trillion into it. This sounds like madness.
The wise guys on Wall Street cooked up nefarious schemes that inflated real estate prices, created a bubble, brought the economy down, and now the Fed is supposed to keep those artificially inflated prices propped up?
Why? Because a broken political system will not allow the president to instead pump a trillion into the 2010 version of the New Deal, but it will allow the unelected Fed chair to play around with a trillion dollars?
Many have speculated this is the Roman empire collapsing. Those who the gods seek to destroy, they first make them mad.
I am for a second stimulus bill of perhaps a trillion poured into drastic job creation.
And all the work of creating the global institutions for the next phase of globalization is yet to be done. There can be no real recovery without that.
Those who say this is like the Great Depression are right. Where they get it wrong is when they don't face the fact that now the entire world is a stage. It is one world. The reason people acted surprised when the bottom fell out was because they had their US goggles on. Put on world goggles. Then you can see.
Can a democracy make its people lose weight? That is the challenge. Instead the democracy continues to gorge on French fries and tea parties. Some hard choices are going to have to be made.
BusinessWeek
Germany At 20: Special Report Germany's Growth: New Rules, Old Companies: As most developed nations stumble in the race against emerging nations, here's how Germany has succeeded in keeping skilled labor working in good jobs....($3.23 trillion) gross domestic product .... , labor market measures begun in 2003 under Chancellor Gerhard Schröder made it easier to hire and fire workers, and Germany's Mittelstand have proved nimble competitors ...... German labor unions gave up wage increases in return for job security. ..... The Mittelstand companies, which typically employ fewer than 500 workers, comprise more than 70 percent of German workers and contribute roughly half of the country's GDP. The Mittelstand also embodies the German approach to business practice—paternalistic, consensual, conservative, and arguably more effective over the long haul than what Germans sometimes dismiss as American-style cowboy capitalism...... Mittelstand companies have emerged as successful models in an era of globalization—agile creatures darting between the legs of the multinational monsters..... Rather than firing workers, companies reduced hours, saving almost half a million jobs. ..... a system of worktime accounts that enabled employees to work fewer hours without a reduction in pay, in exchange for promising to work more hours without a salary increase when business picks up..... By May of this year, unemployment in Germany was at 7 percent, a 17-year low..... they prefer bank loans to selling bonds or issuing stock ..... it was wage restraint over the last 10 years that's responsible for Germany's success
Goldman Sachs Says U.S. Economy May Be ‘Fairly Bad’: “A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.” ...... The Fed bought $1.7 trillion worth of Treasury and mortgage debt in a program that ended in March. The purchases helped push mortgage rates to historic lows. ... Bernanke said Oct. 4 that restarting large- scale asset purchases would probably spur growth
China Hardens Opposition Over Yuan Gains, Tells EU to Back Off: “Europe shouldn’t join the choir” ..... If we increase the yuan by 20-40 percent as some people are calling for, many of our factories will shut down and society will be in turmoil.” ..... Brazilian Finance Minister Guido Mantega warned of a global “currency war.”
India Can Help Obama Reach Export Goal: The last time U.S. exports doubled in five years was 1981-1986, when Ronald Reagan was President—and Japan, not China, was the economy Americans feared most. ..... China, India, Brazil, Canada, and Mexico. ..... the Indian economy is the world's fourth-wealthiest—based on purchasing power parity—after the U.S., Japan, and China. ....... the country will keep growing at close to 10 percent in the next decade ..... "Do you have a favorable or unfavorable view of the U.S.?" Some 76 percent of Indian citizens responded affirmatively. ..... Americans are better-liked in India than almost anywhere else in the world ........ Today the U.S. is the world's breadbasket. In India you will find Washington State apples as well as California almonds and pistachios ..... India now hopes for a trillion-dollar upgrade of roads, bridges, power plants, harbors and more. .... Carter was the last President to travel to India within two years of taking office
Volcker Says Nations May Face Prolonged Unemployment: the U.S. and other developed nations face the prospect of protracted joblessness. ..... “This has not been an ordinary recession,” Volcker, 83, said today in a speech in Toronto. It’s “very difficult to find a sector in the American economy that has any spark to it” ..... the Chinese are stuck with dollars and we’re stuck with indebtedness.”
The job numbers for June came out and they were not looking good at all. The worst recession since the Great Depression is not over yet, but I am on record saying the bungee jump phase is over, and now we are in the plateau phase. And I don't think the plateau phase will last as long as the bungee jump phase did.
There was the original bailout before America even had elections. Then there was the jumbo stimulus package. And then the G20 summit where the world leaders took substantive action. Next thing you know good news started trickling out of Wall Street. It is not exactly time to throw a party yet. There is no boom feeling. But I have a feeling the big crisis that has been blowing hot and cold for the past eight months might have plateaued.
The good news is the steep fall part of the bungee jump might be over. The bad news is there is no telling how long the plateau might last. The worse news is we are not in the upswing phase yet. And you still hear the sound of glass being broken.
The US economy, and the global economy are such big monsters, it is hard for any government to steer them in any direction at any speed. It is kind of like trying to give a 180 degree turn to the Titanic.
For the past decade we have talked of global warming, and we have talked of global terror. But we were not exactly talking global finance. Imagine twice as many hurricanes any given year. Imagine 10 dirty bombs in the 10 big cities of the world on the same day. Those would be the climate and terror versions of what we have been going through in finance.
The pain has been very real, and ultimately it is for the political leadership to steer a course. We have to have a healthy, robust debate all along. We have to be creative, inventive. We have to do the sane thing, the right thing. We have to think long term. We are in this together. This is one world, one planet, one globe.
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