Eurozone Core Countries Falter as the UK, Eastern Europe Make a Break Away

Eurozone GDP growth was 0.1% in the third quarter.  The barely perceptible growth in Q3 came from a slowdown in Germany (0.3%; down from 0.7% earlier this year) and contractions in France and Italy (each by 0.1%).  Meanwhile, the UK appears to be decoupling from the rest of Europe(Alt) as its own recovery seems more robust by comparison.  As Europe’s recovery continues to be ever so fragile and contentious, frantic EU bulls are turning to former soviet bloc countries in Eastern Europe for signs of hope.  Countries like Romania and Hungary are growing much quicker than the Euro core countries.  Meanwhile, Ireland is making a comeback in the bond market.  In what the Irish Finance Minister is calling a “clean exit,” Ireland will make its entrance without any sort of insurance policy from the IMF or the Eurozone.  Also, Ukraine’s parliament is dashing hopes for joining the European Union as they voted to keep jailed opposition leader Yulia Tymoshenko from seeking medical treatment in Germany.  Ukraine is caught in the middle between the EU and Russia, who have a trade imbalance power over Ukraine, specifically in oil and gas.

Post-QE-Stress Syndrome

A new report from McKinsey suggests that in the wake of QE and ultra-low interest rates, government borrowers such as the United States and Great Britain have benefitted the most, with nonfinancial corporations coming in second, large financial institutions in third and households benefitting the least.  The findings of the report are the focus of a round-table discussion hosted by The Economist.  Joseph Gagnon of the Peterson Institute offers his view: “QE has pushed up equity and real estate prices, but that is mainly a transfer [of wealth] from tomorrow’s wealthy to today’s wealthy…given that less QE would mean less employment, the non-wealthy clearly are better off with QE than without it.”  Meanwhile, Janet Yellen vigorously defended QE(Alt) at her first confirmation hearing this morning, “arguing that [QE has] made a meaningful contribution to economic growth” and led to improvement in the US labor market.”  Also, here’s an update on what Fed officials have been saying recently about tapering.

#TooBigToFail?  Nah.

Twitter might not be the answer for every corporation looking to enhance their youthful consumer base.  JPMorgan Chase has canceled a planned Q&A session on Twitter(Alt) after attracting thousands of angry tweets (i.e. Do you have a secret jail in your offices so your executives get at least one chance to see the inside of one? #AskJPM).  “At least two-thirds of the more than 8,000 tweets that were sent using the hashtag #AskJPM displayed some type of negative comment, according to Topsy,” a Twitter analysis company.  JPMorgan finally waved the white flag late last night: “Bad Idea.  Back to the drawing board.”  Meanwhile, the number of internet users in India is nearly 10 times the population of Australia, and may become the world’s second largest internet base after China by 2014.  While India lags behind the US by about 2 million users currently, many question the differences between the two countries average internet activity levels.  However, mobile phones have really increased internet access across rural India; 70% of active internet users do so with a cell phone.

 

USA: How Best to Eliminate the Fiscal Gap?

Research from George Mason University indicates that “modest decreases in federal spending yield much more bang for the buck than relying solely on economic growth to resolve our fiscal woes.”  Not to mention more manageable and within our control (we still have control over our budget right?).  Also, here are some great graphs on Federal Spending from the Congressional Budget Office.

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