santosh10
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Eurozone Crisis online
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santosh10
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Modest Euro Zone Growth Fails to Dent Unemployment Rate
By JACK EWING and DAVID JOLLYJULY 1, 2014
FRANKFURT — The unemployment rate in the euro zone remained close to a high in May, according to official data released on Tuesday, a reminder that despite modest growth, the recession has never ended for millions of Europeans.
The jobless rate in the 18-nation euro zone in May was 11.6 percent, unchanged from the revised rate for April, according to Eurostat, the European Union statistics agency.
The rate for April was revised downward from a previously reported 11.7 percent. Economists had expected the rate in May to again be 11.7 percent.
"Today's labor market data underline the very tentative pace of recovery in the euro zone," Tom Rogers, an economist who advises the consulting firm Ernst & Young, said in an email. He said he expected the jobless rate to remain above 11 percent until 2016.
For all 28 nations in the European Union, the unemployment rate in May declined slightly to 10.3 percent from a revised 10.4 percent in April, meaning 25.2 million people were without work in May. Of those, 18.6 million were in the euro zone.
Joblessness in the euro area has fallen since peaking last year at 12 percent, but it remains above rates of less than 8 percent that prevailed before the financial crisis began in 2008. Growth remains slow or nonexistent in much of the euro zone, and companies have not been willing to hire.
Economists warn that such persistent mass unemployment will cause long-term damage that goes beyond the immediate human cost.
"If you're out of work for a long time, it's not just that your skills become obsolete," Moritz Kraemer, managing director and chief rating officer for sovereign ratings at Standard & Poor's, told a conference in Paris on Tuesday, adding that workers become disillusioned and find it ever harder to return to work.
That is bad news for European economies, he said, because the region — which faces a demographic problem in the aging of its citizenry — needs to keep people working to fund its social welfare support system.
The problem is particularly serious where young people are concerned, Mr. Kraemer added. "If you have youth unemployment of 50 percent, as you do in some places," he said, "these are the people we need to pay our pensions."
There continued to be huge disparities among countries within the euro zone. There was nearly full employment in Austria, with a 4.7 percent jobless rate, and Germany, with 5.1 percent. But unemployment in Spain remained unchanged at 25.1 percent in May compared with April, despite signs that the Spanish economy was improving.
In Italy, unemployment rose to 12.6 percent in May from 12.5 percent in April.
Greece had the highest jobless rate in the euro zone, with unemployment at 26.8 percent in March, the most recent month for which figures were reported.
http://www.nytimes.com/2014/07/02/b...wth-fails-to-dent-unemployment-rate.html?_r=0
By JACK EWING and DAVID JOLLYJULY 1, 2014
FRANKFURT — The unemployment rate in the euro zone remained close to a high in May, according to official data released on Tuesday, a reminder that despite modest growth, the recession has never ended for millions of Europeans.
The jobless rate in the 18-nation euro zone in May was 11.6 percent, unchanged from the revised rate for April, according to Eurostat, the European Union statistics agency.
The rate for April was revised downward from a previously reported 11.7 percent. Economists had expected the rate in May to again be 11.7 percent.
"Today's labor market data underline the very tentative pace of recovery in the euro zone," Tom Rogers, an economist who advises the consulting firm Ernst & Young, said in an email. He said he expected the jobless rate to remain above 11 percent until 2016.
For all 28 nations in the European Union, the unemployment rate in May declined slightly to 10.3 percent from a revised 10.4 percent in April, meaning 25.2 million people were without work in May. Of those, 18.6 million were in the euro zone.
Joblessness in the euro area has fallen since peaking last year at 12 percent, but it remains above rates of less than 8 percent that prevailed before the financial crisis began in 2008. Growth remains slow or nonexistent in much of the euro zone, and companies have not been willing to hire.
Economists warn that such persistent mass unemployment will cause long-term damage that goes beyond the immediate human cost.
"If you're out of work for a long time, it's not just that your skills become obsolete," Moritz Kraemer, managing director and chief rating officer for sovereign ratings at Standard & Poor's, told a conference in Paris on Tuesday, adding that workers become disillusioned and find it ever harder to return to work.
That is bad news for European economies, he said, because the region — which faces a demographic problem in the aging of its citizenry — needs to keep people working to fund its social welfare support system.
The problem is particularly serious where young people are concerned, Mr. Kraemer added. "If you have youth unemployment of 50 percent, as you do in some places," he said, "these are the people we need to pay our pensions."
There continued to be huge disparities among countries within the euro zone. There was nearly full employment in Austria, with a 4.7 percent jobless rate, and Germany, with 5.1 percent. But unemployment in Spain remained unchanged at 25.1 percent in May compared with April, despite signs that the Spanish economy was improving.
In Italy, unemployment rose to 12.6 percent in May from 12.5 percent in April.
Greece had the highest jobless rate in the euro zone, with unemployment at 26.8 percent in March, the most recent month for which figures were reported.
http://www.nytimes.com/2014/07/02/b...wth-fails-to-dent-unemployment-rate.html?_r=0
santosh10
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Eurozone's Drop in Inflation Carries More Fears of Another Recession
30, 2014
FRANKFURT — The drop in eurozone inflation reported Tuesday was, in one sense, just a decimal point, another digit in the daily flow of depressing economic data. Yet it raised an increasingly urgent question: What will it take to arrest the Continent's slow-motion descent toward another recession and, possibly, a renewed existential crisis? :ranger:
It has been almost two years since inflation in the eurozone was at 2 percent, right around the level that the European Central Bank considers optimal for stability and growth. In September, according to an official estimate published Tuesday, the annual rate of inflation fell to 0.3 percent from 0.4 percent the month before.
Inflation is at a five-year low, leading many economists to warn that the eurozone economy is in danger of officially tipping into deflation. But even the current low level of inflation can cause consumers to delay making purchases, companies to lose revenue and unemployment to soar from already high levels.
Joblessness in the 18 countries in the zone remained at 11.5 percent in August, the European Union's statistics office, Eurostat, also reported on Tuesday. Nearly one out of four youths in the eurozone is jobless.
The figures came two days before the European Central Bank is scheduled to discuss monetary policy, and they are sure to increase calls for more aggressive stimulus action. But analysts are nearly unanimous that none will be coming when the central bank's governing council convenes in Naples on Thursday during one of its twice-yearly road trips outside Frankfurt.
The central bank faces an array of obstacles preventing it from undertaking the same kind of broad-based asset purchases that the United States Federal Reserve and the Bank of England have used to revive their economies.
Since the financial crisis began in 2008, so-called quantitative easing has become a standard weapon in the central banking arsenal, except in the eurozone. That is true even though the central bank has consistently underestimated the severity of the decline in inflation.
Mario Draghi, the central bank president, remains constrained by divisions on its governing council, the fragmented structure of the eurozone financial system, and political resistance in Germany.
The central bank has offered banks four-year loans that are practically interest-free in an effort to restart lending, and it plans to begin buying private-sector assets in October. Mr. Draghi has promised to offer more details on the asset purchases on Thursday.
Purchases of government bonds, an essential component of full-blown quantitative easing, remains taboo for many Germans, who regard it as a way of transferring wealth from richer countries to poorer ones. They fear that, if any countries defaulted on their debts, the central bank would pass on the losses to other member countries.
"That's the big question — if the E.C.B. can deliver something substantial," said Zsolt Darvas, a senior fellow at Bruegel, a research organization in Brussels. "My theory is that they won't."
Continue reading the main story
To be sure, inflation could pick up in the coming months because of the decline in the value of the euro, which on Tuesday sank below $1.26 for the first time since September 2012. A weak euro makes imported fuel and other goods more expensive for residents of the eurozone and contributes to higher inflation.
Slumping energy prices were one reason for the decline in inflation in September. But there was also a decline in the so-called core inflation rate, which excludes prices for food and energy because they tend to fluctuate often. Core inflation fell to 0.7 percent from 0.9 percent, Eurostat said.
The decline in that rate is potentially more worrying for the central bank because it is a more direct reflection of slack demand and the poor health of the eurozone economy.
"The E.C.B. will hardly be pleased at the outlook of very low inflation rate for a longer period of time," Christoph Weil, an economist at Commerzbank, said in a note to clients.
The decline in the overall inflation rate to 0.3 percent was a preliminary estimate by Eurostat. The figure, which could be revised, was in line with analysts' expectations but still well below the bank's target of just under 2 percent.
The decline in consumer prices has been greater than the central bank expected. As recently as March, central bank economists forecast that inflation this year would average 1 percent. In June, they lowered the forecast to 0.7 percent, and in September, to 0.6 percent.
Gains in recent state elections by a conservative anti-euro party, the Alternative for Germany, could make the central bank even more cautious in the coming months. More aggressive monetary policy might nourish support for populist right-wing parties in Europe, which have fed on resentment toward European institutions like the bank.
"The E.C.B. is ready to do everything but buy government bonds," Joachim Fels, chief global economist at Morgan Stanley, said last week during a meeting with a small group of journalists. "That shows how great the resistance is to this normal and widely used measure."
To return to meaningful growth, economists say, the eurozone probably needs a combination of measures, including more-powerful stimulus from the central bank, like government bond buying; more government spending by countries that can afford it, like Germany; and deep changes in the regulations that govern business and labor in France and Italy.
The European Central Bank is preparing to buy so-called asset-backed securities, bank loans that have been bundled for resale on financial markets. It also plans to buy covered bonds, which are similar. The purchases are seen as a preliminary form of quantitative easing and a way to arrest a decline in bank lending.
By selling off existing loans, banks would raise money to issue new ones. But analysts doubt that the central bank would be able to find enough asset-backed securities and covered bonds that meet its quality standards and allow it to achieve the larger goal — pumping more money into the eurozone economy.
The region registered zero growth in the second quarter, threatening to interrupt a tentative decline in joblessness.
Although the unemployment rate in the eurozone was unchanged at 11.5 percent, the absolute number of jobless people fell by 137,000 to 18.3 million, Eurostat said. The incremental decline suggests that unemployment will fall in the coming months but at a painfully slow pace.
"We continue to expect only a modest and gradual fall in unemployment rate in the coming quarters," analysts at Barclays said in a note to clients.
As in previous months, Greece and Spain had the highest unemployment rates, with 27 percent and 24.4 percent. In both countries, though, the rate has been edging slowly downward. The rate for Greece is from June, the most recent reported.
Austria, with 4.7 percent, and Germany, with 4.9 percent, had the lowest unemployment rates in August.
Unemployment among those under age 25 remained at 23.3 percent in the eurozone. In Greece and Spain, the jobless rate among youths remained above 50 percent, while in Italy and Croatia, it was over 40 percent.
Mr. Draghi has emphasized in recent weeks that he cannot solve such economic problems alone. He has pleaded with eurozone leaders to cut taxes and red tape and to remove impediments to entrepreneurship and hiring.
"No monetary — and also no fiscal — stimulus can ever have a meaningful effect without such structural reforms," he told members of the European Parliament on Sept. 22.
Indeed, there is evidence that bank lending is held back not by a shortage of credit but by a dearth of creditworthy borrowers who are confident enough about the future to want to invest in new employees and in expanding their businesses.
"There is no demand, because nobody is doing anything," said Stefano Micossi, director general of Assonime, an Italian business group. "Everybody is waiting."
http://www.nytimes.com/2014/10/01/b...ut-unemployment-remains-steady-data-show.html
30, 2014
FRANKFURT — The drop in eurozone inflation reported Tuesday was, in one sense, just a decimal point, another digit in the daily flow of depressing economic data. Yet it raised an increasingly urgent question: What will it take to arrest the Continent's slow-motion descent toward another recession and, possibly, a renewed existential crisis? :ranger:
It has been almost two years since inflation in the eurozone was at 2 percent, right around the level that the European Central Bank considers optimal for stability and growth. In September, according to an official estimate published Tuesday, the annual rate of inflation fell to 0.3 percent from 0.4 percent the month before.
Inflation is at a five-year low, leading many economists to warn that the eurozone economy is in danger of officially tipping into deflation. But even the current low level of inflation can cause consumers to delay making purchases, companies to lose revenue and unemployment to soar from already high levels.
Joblessness in the 18 countries in the zone remained at 11.5 percent in August, the European Union's statistics office, Eurostat, also reported on Tuesday. Nearly one out of four youths in the eurozone is jobless.
The figures came two days before the European Central Bank is scheduled to discuss monetary policy, and they are sure to increase calls for more aggressive stimulus action. But analysts are nearly unanimous that none will be coming when the central bank's governing council convenes in Naples on Thursday during one of its twice-yearly road trips outside Frankfurt.
The central bank faces an array of obstacles preventing it from undertaking the same kind of broad-based asset purchases that the United States Federal Reserve and the Bank of England have used to revive their economies.
Since the financial crisis began in 2008, so-called quantitative easing has become a standard weapon in the central banking arsenal, except in the eurozone. That is true even though the central bank has consistently underestimated the severity of the decline in inflation.
Mario Draghi, the central bank president, remains constrained by divisions on its governing council, the fragmented structure of the eurozone financial system, and political resistance in Germany.
The central bank has offered banks four-year loans that are practically interest-free in an effort to restart lending, and it plans to begin buying private-sector assets in October. Mr. Draghi has promised to offer more details on the asset purchases on Thursday.
Purchases of government bonds, an essential component of full-blown quantitative easing, remains taboo for many Germans, who regard it as a way of transferring wealth from richer countries to poorer ones. They fear that, if any countries defaulted on their debts, the central bank would pass on the losses to other member countries.
"That's the big question — if the E.C.B. can deliver something substantial," said Zsolt Darvas, a senior fellow at Bruegel, a research organization in Brussels. "My theory is that they won't."
Continue reading the main story
To be sure, inflation could pick up in the coming months because of the decline in the value of the euro, which on Tuesday sank below $1.26 for the first time since September 2012. A weak euro makes imported fuel and other goods more expensive for residents of the eurozone and contributes to higher inflation.
Slumping energy prices were one reason for the decline in inflation in September. But there was also a decline in the so-called core inflation rate, which excludes prices for food and energy because they tend to fluctuate often. Core inflation fell to 0.7 percent from 0.9 percent, Eurostat said.
The decline in that rate is potentially more worrying for the central bank because it is a more direct reflection of slack demand and the poor health of the eurozone economy.
"The E.C.B. will hardly be pleased at the outlook of very low inflation rate for a longer period of time," Christoph Weil, an economist at Commerzbank, said in a note to clients.
The decline in the overall inflation rate to 0.3 percent was a preliminary estimate by Eurostat. The figure, which could be revised, was in line with analysts' expectations but still well below the bank's target of just under 2 percent.
The decline in consumer prices has been greater than the central bank expected. As recently as March, central bank economists forecast that inflation this year would average 1 percent. In June, they lowered the forecast to 0.7 percent, and in September, to 0.6 percent.
Gains in recent state elections by a conservative anti-euro party, the Alternative for Germany, could make the central bank even more cautious in the coming months. More aggressive monetary policy might nourish support for populist right-wing parties in Europe, which have fed on resentment toward European institutions like the bank.
"The E.C.B. is ready to do everything but buy government bonds," Joachim Fels, chief global economist at Morgan Stanley, said last week during a meeting with a small group of journalists. "That shows how great the resistance is to this normal and widely used measure."
To return to meaningful growth, economists say, the eurozone probably needs a combination of measures, including more-powerful stimulus from the central bank, like government bond buying; more government spending by countries that can afford it, like Germany; and deep changes in the regulations that govern business and labor in France and Italy.
The European Central Bank is preparing to buy so-called asset-backed securities, bank loans that have been bundled for resale on financial markets. It also plans to buy covered bonds, which are similar. The purchases are seen as a preliminary form of quantitative easing and a way to arrest a decline in bank lending.
By selling off existing loans, banks would raise money to issue new ones. But analysts doubt that the central bank would be able to find enough asset-backed securities and covered bonds that meet its quality standards and allow it to achieve the larger goal — pumping more money into the eurozone economy.
The region registered zero growth in the second quarter, threatening to interrupt a tentative decline in joblessness.
Although the unemployment rate in the eurozone was unchanged at 11.5 percent, the absolute number of jobless people fell by 137,000 to 18.3 million, Eurostat said. The incremental decline suggests that unemployment will fall in the coming months but at a painfully slow pace.
"We continue to expect only a modest and gradual fall in unemployment rate in the coming quarters," analysts at Barclays said in a note to clients.
As in previous months, Greece and Spain had the highest unemployment rates, with 27 percent and 24.4 percent. In both countries, though, the rate has been edging slowly downward. The rate for Greece is from June, the most recent reported.
Austria, with 4.7 percent, and Germany, with 4.9 percent, had the lowest unemployment rates in August.
Unemployment among those under age 25 remained at 23.3 percent in the eurozone. In Greece and Spain, the jobless rate among youths remained above 50 percent, while in Italy and Croatia, it was over 40 percent.
Mr. Draghi has emphasized in recent weeks that he cannot solve such economic problems alone. He has pleaded with eurozone leaders to cut taxes and red tape and to remove impediments to entrepreneurship and hiring.
"No monetary — and also no fiscal — stimulus can ever have a meaningful effect without such structural reforms," he told members of the European Parliament on Sept. 22.
Indeed, there is evidence that bank lending is held back not by a shortage of credit but by a dearth of creditworthy borrowers who are confident enough about the future to want to invest in new employees and in expanding their businesses.
"There is no demand, because nobody is doing anything," said Stefano Micossi, director general of Assonime, an Italian business group. "Everybody is waiting."
http://www.nytimes.com/2014/10/01/b...ut-unemployment-remains-steady-data-show.html
santosh10
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Europe is in an epic depression — and it's getting worse
August 15, 2014
Economic growth in Europe came in at zero in the second quarter of 2014. That's better than being in recession. But it's not the growth that Europe — with its huge unemployment rate of 12 percent, or roughly 19,130,000 people out of work — needs. :ranger:
The euro zone (below in blue) has been in a depression since the financial crisis. That's because in terms of gross domestic product, the euro zone has not risen back to its pre-financial-crisis levels. The U.S. (below in red), on the other hand, has gotten out of its slump and continues to grow at a decent clip:
(Federal Reserve Bank of St. Louis/OECD)
With industrial production stagnant, mass unemployment still a problem, and inflation on a downward trend, economists such as The New York Times's Paul Krugman worry that Europe is turning into Japan. The former second-largest economy in the world has spent more than 20 years in a deflationary depression, a spiral of falling prices which encourage people to sit on cash, causing prices to plunge even further. Europe — with its aging population — has similar demographics to Japan, too, worsening the likelihood that it might end up in the same trap.
That might be bad, but it's still a lot better than total collapse — which is what was widely feared in 2011 and 2012 when government interest rates rose drastically in countries like Italy, Spain, Greece, Ireland, and Portugal over fears about the sustainability of their sovereign debts. Under the euro, countries don't control their currencies, so they run a real risk of running out of money. The architects of the euro system, such as Romano Prodi, knew that this would be a problem but decided that they would cross that bridge when they came to it.
Since then, the European Central Bank (ECB) and the European Financial Stability Fund (EFSF) have been able to deploy various tools, including so-called outright monetary transactions, to backstop those governments and contain the sovereign debt crisis. Interest rates — even for countries like Spain, which two or three years ago looked in serious danger of default — are now as low as they are in the United States. Perhaps this episode illustrates that the euro was an incompetently designed currency, but the cleanup at least has been a major victory for the ECB.
But by this point it should be pretty clear that simply containing the sovereign debt crisis isn't enough. The Federal Reserve under Ben Bernanke and Janet Yellen is proof that central banks can do much more to avert an economic depression and ensure a recovery. Central banks have tools like quantitative easing to fight unemployment and raise growth.
Alas, the ECB has not really shown interest in using such tools. Opposition to quantitative easing among euro member states — particularly Germany — remains high. And although the ECB's governor, Mario Draghi, has promised that the ECB can theoretically do more, he believes that — even in spite of the low-growth, low-inflation, high-unemployment environment — the European recovery remains "on track" and is more worried about crises in the Middle East and Ukraine than the millions of unemployed people in Europe itself.
Of course, the ECB — unlike the Fed — is not required to achieve low unemployment. It has a single mandate for price stability, which it defines as 2 percent inflation per year.
But let's be real here — even though the ECB has set interest rates extremely low by historical standards (interest rates on bank deposits are currently at a record low -0.1 percent, the ECB hasn't been meeting its 2 percent per year mandate. Inflation in the euro zone currently stands at just 0.4 percent:
So this isn't a matter of the ECB's not having a mandate for low unemployment or the euro system's being badly constructed. Although critics of the ECB and the euro system, such as Pieria View's Frances Coppola, are right in their criticisms, this is a far simpler matter. The ECB is failing to meet its inflation mandate. Things are bad and getting worse, and Draghi is in denial.
When push came to shove, the ECB backstopped the eurozone nations like Spain and Italy. So it's possible that the ECB could finally engage in quantitative easing when inflation falls below zero. But that will be too late to help the millions of unemployed that the ECB has left out in the cold. It will be too late to avert an economic depression. And it may be far too late to prevent the euro zone from falling into a prolonged Japanese-style trap.
Europe is in an epic depression — and it's getting worse - The Week
August 15, 2014
Economic growth in Europe came in at zero in the second quarter of 2014. That's better than being in recession. But it's not the growth that Europe — with its huge unemployment rate of 12 percent, or roughly 19,130,000 people out of work — needs. :ranger:
The euro zone (below in blue) has been in a depression since the financial crisis. That's because in terms of gross domestic product, the euro zone has not risen back to its pre-financial-crisis levels. The U.S. (below in red), on the other hand, has gotten out of its slump and continues to grow at a decent clip:
(Federal Reserve Bank of St. Louis/OECD)
With industrial production stagnant, mass unemployment still a problem, and inflation on a downward trend, economists such as The New York Times's Paul Krugman worry that Europe is turning into Japan. The former second-largest economy in the world has spent more than 20 years in a deflationary depression, a spiral of falling prices which encourage people to sit on cash, causing prices to plunge even further. Europe — with its aging population — has similar demographics to Japan, too, worsening the likelihood that it might end up in the same trap.
That might be bad, but it's still a lot better than total collapse — which is what was widely feared in 2011 and 2012 when government interest rates rose drastically in countries like Italy, Spain, Greece, Ireland, and Portugal over fears about the sustainability of their sovereign debts. Under the euro, countries don't control their currencies, so they run a real risk of running out of money. The architects of the euro system, such as Romano Prodi, knew that this would be a problem but decided that they would cross that bridge when they came to it.
Since then, the European Central Bank (ECB) and the European Financial Stability Fund (EFSF) have been able to deploy various tools, including so-called outright monetary transactions, to backstop those governments and contain the sovereign debt crisis. Interest rates — even for countries like Spain, which two or three years ago looked in serious danger of default — are now as low as they are in the United States. Perhaps this episode illustrates that the euro was an incompetently designed currency, but the cleanup at least has been a major victory for the ECB.
But by this point it should be pretty clear that simply containing the sovereign debt crisis isn't enough. The Federal Reserve under Ben Bernanke and Janet Yellen is proof that central banks can do much more to avert an economic depression and ensure a recovery. Central banks have tools like quantitative easing to fight unemployment and raise growth.
Alas, the ECB has not really shown interest in using such tools. Opposition to quantitative easing among euro member states — particularly Germany — remains high. And although the ECB's governor, Mario Draghi, has promised that the ECB can theoretically do more, he believes that — even in spite of the low-growth, low-inflation, high-unemployment environment — the European recovery remains "on track" and is more worried about crises in the Middle East and Ukraine than the millions of unemployed people in Europe itself.
Of course, the ECB — unlike the Fed — is not required to achieve low unemployment. It has a single mandate for price stability, which it defines as 2 percent inflation per year.
But let's be real here — even though the ECB has set interest rates extremely low by historical standards (interest rates on bank deposits are currently at a record low -0.1 percent, the ECB hasn't been meeting its 2 percent per year mandate. Inflation in the euro zone currently stands at just 0.4 percent:
So this isn't a matter of the ECB's not having a mandate for low unemployment or the euro system's being badly constructed. Although critics of the ECB and the euro system, such as Pieria View's Frances Coppola, are right in their criticisms, this is a far simpler matter. The ECB is failing to meet its inflation mandate. Things are bad and getting worse, and Draghi is in denial.
When push came to shove, the ECB backstopped the eurozone nations like Spain and Italy. So it's possible that the ECB could finally engage in quantitative easing when inflation falls below zero. But that will be too late to help the millions of unemployed that the ECB has left out in the cold. It will be too late to avert an economic depression. And it may be far too late to prevent the euro zone from falling into a prolonged Japanese-style trap.
Europe is in an epic depression — and it's getting worse - The Week
santosh10
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Shrinking Europe Military Spending Stirs Concern
April 22, 2013
BRUSSELS — Alarmed by years of cuts to military spending, the NATO secretary general, Anders Fogh Rasmussen, issued a dire public warning to European nations, noting that together they had slashed $45 billion, or the equivalent of Germany's entire military budget, endangering the alliance's viability, its mission and its relationship with the United States. :ranger:
That was two years ago. Since then, with the Afghan war winding down and pressure from the European Union to limit budget deficits, Europe has only cut deeper.
Now, as President Obama wrestles with his own huge budget deficit and military costs, the responsibility for keeping NATO afloat has fallen disproportionately onto the United States, an especially untenable situation as priorities shift to Asia.
The United States finances nearly three-quarters of NATO's military spending, up from 63 percent in 2001. And yet among the alliance's 28 nations, experts note, only the United States, Britain and Greece are meeting NATO's own spending guidelines of 2 percent of gross domestic product. Even Britain and France — the two leading European nations willing to project military might — are slipping further. France says that by 2014 it may cut deeper still — to just 1.3 percent of G.D.P., down from 1.9 percent this year. By comparison, the United States spent 4.8 percent of its G.D.P. on the military in 2011.
In 2012, for the first time, military spending among Asian nations, in particular China, exceeded that of the Europeans.
"We are moving toward a Europe that is a combination of the unable and the unwilling," said Camille Grand, a French military expert who directs the Foundation for Strategic Research. "European countries are continuing to be free riders, instead of working seriously to see how to act together."
Increasingly, without United States assistance, military experts said, Europe's armed forces have trouble carrying out basic operations as its dwindling financial and political commitment has derailed multiple initiatives intended to make the continent more self-reliant.
NATO's deputy secretary general, Alexander R. Vershbow, a former senior Defense Department official, said that "the financial crisis has been corrosive to the alliance" and that relations between the European Union and NATO remained "dysfunctional."
Even as Britain and France have boasted of operations in Libya and Mali, those interventions have revealed Europe's weakness more than its strength. In Libya, the United States supplied intelligence, drones, fighter and refueling aircraft, ammunition stocks and missiles to destroy air defenses, and in Mali the French required American intelligence, drones, and refueling and transport aircraft. :ranger:
Senior American officials have warned that unless European countries spend more on defense, they risk "collective military irrelevance."
A senior American official said that Washington was eager for partnership in the Middle East and Asia, but that "Europe's decision to abdicate on defense spending increasingly means it can't take care of itself, and it can't be a valuable partner to us."
While the United States would like to be able to rely more on its European allies, many experts doubt that even the strongest among them, Britain and France, could carry out their part of another Libya operation now, and certainly not in a few years. Both are struggling to maintain their own nuclear deterrents as well as mobile, modern armed forces. The situation in Britain is so bad that American officials are quietly urging it to drop its expensive nuclear deterrent.
"Either they can be a nuclear power and nothing else or a real military partner," a senior American official said.
The challenge is particularly acute as NATO pulls its forces out of Afghanistan after a long, wearying and unsatisfying war, with results widely seen as fragile, even unsustainable. After Afghanistan, with Europeans looking inward and the Russian threat considered more rhetorical than real, some wonder once more about the real utility of NATO.
James M. Goldgeier, dean of the School of International Service at American University in Washington, thinks that NATO has some considerable soul-searching ahead if its European members become increasingly unwilling to operate abroad.
"If NATO isn't outward looking, it's got nothing to do," he said. "It can't go back to managing a threat from Russia, because it's not a real threat."
A decade of halting European efforts to create a Common Security and Defense Policy has yielded little. A NATO Response Force, agreed to in 2002, was supposed to be an all-terrain rapid reaction force, with rotating membership for land, air, naval and special forces, ready to go anywhere and do most anything with at least 13,000 troops. But it has never been used, except in part to add security to the 2004 Athens Olympic Games and the 2004 Afghan elections and to provide disaster relief.
The European Union had a 1999 goal of 60,000 troops available for battle in a "Eurocorps." That has been quietly abandoned, replaced by battle groups of 1,500 to 2,500 troops, also on a rotating basis among the many and differently equipped member states. The "lead" country is supposed to take the political risk and provide most of the troops and most of the money.
"Not every battle group has been what it's made out to be," said Tomas Valasek, a defense expert and president of the Central European Policy Institute in Bratislava, Slovakia, with diplomatic understatement. "Some are more ready than others."
But the will to participate has also declined. While the intent was to have two battle groups, a shortage of countries willing to participate has meant a quiet halving of ready forces to one battle group.
There is also a French-German brigade, formed in 1987, of some 5,000 men, which proudly marched down the Champs-Ã"°lysées on Bastille Day. But it, too, has remained unused. When the French wanted to use it for Mali, the Germans objected.
"It's given military cooperation a bad name," Mr. Valasek said. The brigade was supposed to be the foundation for the Eurocorps, the abandoned goal of 60,000 troops ready to deploy for two months, but the reality has been embarrassing.
The Germans also objected to fighting in Libya, and even the European Union's effort to come up with 550 military trainers to help reconstruct the Malian Army became a slow slog of negotiations and preparations; the first of those trainers has only now arrived.
There have been many discussions of how smaller European countries can share capabilities, the way the Baltic States do, and the Dutch and Belgians do for naval training and ship purchasing. There is an old debate about whether some countries will give up their own capabilities — air forces or navies, for example — so long as partners agree to protect them.
"The way forward is to permanently pool training, procurement, logistics and maintenance," Mr. Valasek said. "We won't find any more money any time soon." In the meantime, a lack of procurement means a steady decline as older weapons systems become obsolete.
Toomas Hendrik Ilves, the president of NATO member Estonia, said that "it's time for a serious rethink about security policy."
The United States "has made it clear that it won't continue to pay what is now 75 percent of all NATO military spending," he said. "That should be sufficient for the European members of NATO to understand that this can't work as now," especially with the rise of China.
A Western European ambassador to NATO said that "we need to think more about how to share the burden and rebalance it, both in decision-making and responsibility," especially with the pivot to Asia. France, he said, sees the pivot "as an opportunity, while the East Europeans see it as a threat." After Afghanistan, he said, "we need an adult conversation about rebalancing."
James B. Steinberg, a former deputy secretary of state and deputy national security adviser, now dean of the Maxwell School at Syracuse University, said that Washington could cope. "There's less strategic focus on the remaining security problems in Europe itself," which he described as mostly residual, including the Balkans and a post-Soviet equilibrium. That means Washington will not put more resources into Europe, especially as it concentrates on China.
But on broader strategic challenges, including China, Washington "likes the partnership with Europe for political legitimacy, which is not a function of its military capacity," he said. European political support allows the United States to take a broader position in East Asia that is not simply bilateral.
No one knows where the next crisis will emerge, Mr. Steinberg said, but it is useful to have NATO there, even acting as a limited coalition, as in Libya. If the United States represents 75 percent of NATO spending, "that's a modest price to pay when the next crisis comes along."
Whatever NATO's weaknesses, "if it were gone, it would be very, very hard to recreate."
http://www.nytimes.com/2013/04/23/w...ing-under-scrutiny.html?pagewanted=all&_r=0#h
April 22, 2013
BRUSSELS — Alarmed by years of cuts to military spending, the NATO secretary general, Anders Fogh Rasmussen, issued a dire public warning to European nations, noting that together they had slashed $45 billion, or the equivalent of Germany's entire military budget, endangering the alliance's viability, its mission and its relationship with the United States. :ranger:
That was two years ago. Since then, with the Afghan war winding down and pressure from the European Union to limit budget deficits, Europe has only cut deeper.
Now, as President Obama wrestles with his own huge budget deficit and military costs, the responsibility for keeping NATO afloat has fallen disproportionately onto the United States, an especially untenable situation as priorities shift to Asia.
The United States finances nearly three-quarters of NATO's military spending, up from 63 percent in 2001. And yet among the alliance's 28 nations, experts note, only the United States, Britain and Greece are meeting NATO's own spending guidelines of 2 percent of gross domestic product. Even Britain and France — the two leading European nations willing to project military might — are slipping further. France says that by 2014 it may cut deeper still — to just 1.3 percent of G.D.P., down from 1.9 percent this year. By comparison, the United States spent 4.8 percent of its G.D.P. on the military in 2011.
In 2012, for the first time, military spending among Asian nations, in particular China, exceeded that of the Europeans.
"We are moving toward a Europe that is a combination of the unable and the unwilling," said Camille Grand, a French military expert who directs the Foundation for Strategic Research. "European countries are continuing to be free riders, instead of working seriously to see how to act together."
Increasingly, without United States assistance, military experts said, Europe's armed forces have trouble carrying out basic operations as its dwindling financial and political commitment has derailed multiple initiatives intended to make the continent more self-reliant.
NATO's deputy secretary general, Alexander R. Vershbow, a former senior Defense Department official, said that "the financial crisis has been corrosive to the alliance" and that relations between the European Union and NATO remained "dysfunctional."
Even as Britain and France have boasted of operations in Libya and Mali, those interventions have revealed Europe's weakness more than its strength. In Libya, the United States supplied intelligence, drones, fighter and refueling aircraft, ammunition stocks and missiles to destroy air defenses, and in Mali the French required American intelligence, drones, and refueling and transport aircraft. :ranger:
Senior American officials have warned that unless European countries spend more on defense, they risk "collective military irrelevance."
A senior American official said that Washington was eager for partnership in the Middle East and Asia, but that "Europe's decision to abdicate on defense spending increasingly means it can't take care of itself, and it can't be a valuable partner to us."
While the United States would like to be able to rely more on its European allies, many experts doubt that even the strongest among them, Britain and France, could carry out their part of another Libya operation now, and certainly not in a few years. Both are struggling to maintain their own nuclear deterrents as well as mobile, modern armed forces. The situation in Britain is so bad that American officials are quietly urging it to drop its expensive nuclear deterrent.
"Either they can be a nuclear power and nothing else or a real military partner," a senior American official said.
The challenge is particularly acute as NATO pulls its forces out of Afghanistan after a long, wearying and unsatisfying war, with results widely seen as fragile, even unsustainable. After Afghanistan, with Europeans looking inward and the Russian threat considered more rhetorical than real, some wonder once more about the real utility of NATO.
James M. Goldgeier, dean of the School of International Service at American University in Washington, thinks that NATO has some considerable soul-searching ahead if its European members become increasingly unwilling to operate abroad.
"If NATO isn't outward looking, it's got nothing to do," he said. "It can't go back to managing a threat from Russia, because it's not a real threat."
A decade of halting European efforts to create a Common Security and Defense Policy has yielded little. A NATO Response Force, agreed to in 2002, was supposed to be an all-terrain rapid reaction force, with rotating membership for land, air, naval and special forces, ready to go anywhere and do most anything with at least 13,000 troops. But it has never been used, except in part to add security to the 2004 Athens Olympic Games and the 2004 Afghan elections and to provide disaster relief.
The European Union had a 1999 goal of 60,000 troops available for battle in a "Eurocorps." That has been quietly abandoned, replaced by battle groups of 1,500 to 2,500 troops, also on a rotating basis among the many and differently equipped member states. The "lead" country is supposed to take the political risk and provide most of the troops and most of the money.
"Not every battle group has been what it's made out to be," said Tomas Valasek, a defense expert and president of the Central European Policy Institute in Bratislava, Slovakia, with diplomatic understatement. "Some are more ready than others."
But the will to participate has also declined. While the intent was to have two battle groups, a shortage of countries willing to participate has meant a quiet halving of ready forces to one battle group.
There is also a French-German brigade, formed in 1987, of some 5,000 men, which proudly marched down the Champs-Ã"°lysées on Bastille Day. But it, too, has remained unused. When the French wanted to use it for Mali, the Germans objected.
"It's given military cooperation a bad name," Mr. Valasek said. The brigade was supposed to be the foundation for the Eurocorps, the abandoned goal of 60,000 troops ready to deploy for two months, but the reality has been embarrassing.
The Germans also objected to fighting in Libya, and even the European Union's effort to come up with 550 military trainers to help reconstruct the Malian Army became a slow slog of negotiations and preparations; the first of those trainers has only now arrived.
There have been many discussions of how smaller European countries can share capabilities, the way the Baltic States do, and the Dutch and Belgians do for naval training and ship purchasing. There is an old debate about whether some countries will give up their own capabilities — air forces or navies, for example — so long as partners agree to protect them.
"The way forward is to permanently pool training, procurement, logistics and maintenance," Mr. Valasek said. "We won't find any more money any time soon." In the meantime, a lack of procurement means a steady decline as older weapons systems become obsolete.
Toomas Hendrik Ilves, the president of NATO member Estonia, said that "it's time for a serious rethink about security policy."
The United States "has made it clear that it won't continue to pay what is now 75 percent of all NATO military spending," he said. "That should be sufficient for the European members of NATO to understand that this can't work as now," especially with the rise of China.
A Western European ambassador to NATO said that "we need to think more about how to share the burden and rebalance it, both in decision-making and responsibility," especially with the pivot to Asia. France, he said, sees the pivot "as an opportunity, while the East Europeans see it as a threat." After Afghanistan, he said, "we need an adult conversation about rebalancing."
James B. Steinberg, a former deputy secretary of state and deputy national security adviser, now dean of the Maxwell School at Syracuse University, said that Washington could cope. "There's less strategic focus on the remaining security problems in Europe itself," which he described as mostly residual, including the Balkans and a post-Soviet equilibrium. That means Washington will not put more resources into Europe, especially as it concentrates on China.
But on broader strategic challenges, including China, Washington "likes the partnership with Europe for political legitimacy, which is not a function of its military capacity," he said. European political support allows the United States to take a broader position in East Asia that is not simply bilateral.
No one knows where the next crisis will emerge, Mr. Steinberg said, but it is useful to have NATO there, even acting as a limited coalition, as in Libya. If the United States represents 75 percent of NATO spending, "that's a modest price to pay when the next crisis comes along."
Whatever NATO's weaknesses, "if it were gone, it would be very, very hard to recreate."
http://www.nytimes.com/2013/04/23/w...ing-under-scrutiny.html?pagewanted=all&_r=0#h
santosh10
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Teenage sulks
Nov 18th 2013
Aged 15, the euro will remain a difficult adolescent
After four years of crisis-fighting, European leaders have the chance to build more solid foundations for their shaky currency zone by sorting out its wobbly banks in 2014. They are more likely to fumble this opportunity than to seize it wholeheartedly. As before, they will do enough to keep the single currency intact but not enough to make it work properly. :ranger:
The year will begin on a high note as Latvia becomes the 18th state to join a currency union that started in 1999 with just 11 members (see article). The decision of this small Baltic country is as much political as economic, as it seeks to curb Russian influence by embedding itself more deeply in Europe. But after all the fears about a "Grexit", Eurocrats will still hail the expansion as a vote of confidence in the euro. And it will come after an earlier boost at the end of 2013, as Ireland becomes the first economy to leave its bail-out programme and return to market financing (though it may still require help through a credit line).
In contrast with these northern lights, the outlook for the bailed-out economies of Greece, Portugal and Cyprus will remain a southern cross. Greece will be lucky to escape a seventh year of recession, and will require extra loans to meet its financing needs in 2014 and 2015: a third bail-out. And, even though Greece has defaulted on a record amount of sovereign bonds, its public debt will be oppressively high, at 175% of GDP. Further debt relief will come to the fore in 2014. Since most of the debt is now owed to other euro-zone countries, that will pose tricky questions, especially for Germany, the biggest creditor, which will do its utmost to avoid outright forgiveness for fear that other rescued countries will clamour for similar treatment.
Euro-zone GDP is expected to expand in 2014 by only a modest 1%
Portugal for its part is heading for a second bail-out. A deep recession caused a political crisis in 2013, which undermined investor confidence, causing hopes for a return to market financing in mid-2014 to recede. But it is Cyprus that will suffer the most. Output will decline cumulatively in 2013 and 2014 by over 12%, according to the IMF, which notes that the fall could exceed 20% in "adverse" circumstances. The main worry is that the recapitalisation of the Bank of Cyprus using uninsured deposits will prove to be inadequate as bad debts surge. :ranger:
A chance to grow up
These setbacks in small southern countries will be manageable if the euro zone can sustain and strengthen the recovery that started in the spring of 2013, with the upswing spreading from Germany to include the big Mediterranean economies of Italy and Spain. One worry is that the German export machine may run slow if Chinese growth falters. Another is that a dearth of credit will hold back smaller Italian and Spanish firms. Even if these risks can be averted, euro-zone GDP is expected to expand in 2014 by only a modest 1%, leaving output still below its peak in 2008. That overall figure disguises how badly some economies like Italy and Portugal have done since the introduction of the euro in 1999 (see chart).
There is an opportunity nonetheless for European leaders to build a basis for stronger sustained growth. The European Central Bank will become the supervisor of the zone's biggest banks in late 2014. Before that, in the first half of the year, it will conduct a searching investigation of their books. This asset-quality review is a chance to deal once and for all with the banking weaknesses that have interacted with unsustainable sovereign-debt burdens to make the euro crisis so intractable. The review could restore investors' faith in euro-zone banks, lowering their funding rates and enabling them to lend more freely to companies.
But if the review is to carry conviction (seearticle), it will prompt tough and potentially costly decisions: closing down banks that are no longer viable and injecting funds to plug capital gaps. That requires recourse if necessary to taxpayers, but Germany has blocked efforts to make this possible at the euro-area level; instead banks will have to rely upon the public purses in their home countries. Yet the weakest banking industries are in the countries with the weakest public finances, such as Italy. The danger is that the asset review becomes another euro-fudge, which does not sever the link between shaky banks and shaky sovereigns.
If Europe fails to seize the opportunity to sort out its banks, then it will fit into a disappointing yet familiar pattern. The euro area may no longer be in mortal danger of breaking up. But it will increasingly resemble a joyless union whose members stay together only for fear of a more painful separation :ranger:
Europe: Teenage sulks | The Economist
Nov 18th 2013
Aged 15, the euro will remain a difficult adolescent
After four years of crisis-fighting, European leaders have the chance to build more solid foundations for their shaky currency zone by sorting out its wobbly banks in 2014. They are more likely to fumble this opportunity than to seize it wholeheartedly. As before, they will do enough to keep the single currency intact but not enough to make it work properly. :ranger:
The year will begin on a high note as Latvia becomes the 18th state to join a currency union that started in 1999 with just 11 members (see article). The decision of this small Baltic country is as much political as economic, as it seeks to curb Russian influence by embedding itself more deeply in Europe. But after all the fears about a "Grexit", Eurocrats will still hail the expansion as a vote of confidence in the euro. And it will come after an earlier boost at the end of 2013, as Ireland becomes the first economy to leave its bail-out programme and return to market financing (though it may still require help through a credit line).
In contrast with these northern lights, the outlook for the bailed-out economies of Greece, Portugal and Cyprus will remain a southern cross. Greece will be lucky to escape a seventh year of recession, and will require extra loans to meet its financing needs in 2014 and 2015: a third bail-out. And, even though Greece has defaulted on a record amount of sovereign bonds, its public debt will be oppressively high, at 175% of GDP. Further debt relief will come to the fore in 2014. Since most of the debt is now owed to other euro-zone countries, that will pose tricky questions, especially for Germany, the biggest creditor, which will do its utmost to avoid outright forgiveness for fear that other rescued countries will clamour for similar treatment.
Euro-zone GDP is expected to expand in 2014 by only a modest 1%
Portugal for its part is heading for a second bail-out. A deep recession caused a political crisis in 2013, which undermined investor confidence, causing hopes for a return to market financing in mid-2014 to recede. But it is Cyprus that will suffer the most. Output will decline cumulatively in 2013 and 2014 by over 12%, according to the IMF, which notes that the fall could exceed 20% in "adverse" circumstances. The main worry is that the recapitalisation of the Bank of Cyprus using uninsured deposits will prove to be inadequate as bad debts surge. :ranger:
A chance to grow up
These setbacks in small southern countries will be manageable if the euro zone can sustain and strengthen the recovery that started in the spring of 2013, with the upswing spreading from Germany to include the big Mediterranean economies of Italy and Spain. One worry is that the German export machine may run slow if Chinese growth falters. Another is that a dearth of credit will hold back smaller Italian and Spanish firms. Even if these risks can be averted, euro-zone GDP is expected to expand in 2014 by only a modest 1%, leaving output still below its peak in 2008. That overall figure disguises how badly some economies like Italy and Portugal have done since the introduction of the euro in 1999 (see chart).
There is an opportunity nonetheless for European leaders to build a basis for stronger sustained growth. The European Central Bank will become the supervisor of the zone's biggest banks in late 2014. Before that, in the first half of the year, it will conduct a searching investigation of their books. This asset-quality review is a chance to deal once and for all with the banking weaknesses that have interacted with unsustainable sovereign-debt burdens to make the euro crisis so intractable. The review could restore investors' faith in euro-zone banks, lowering their funding rates and enabling them to lend more freely to companies.
But if the review is to carry conviction (seearticle), it will prompt tough and potentially costly decisions: closing down banks that are no longer viable and injecting funds to plug capital gaps. That requires recourse if necessary to taxpayers, but Germany has blocked efforts to make this possible at the euro-area level; instead banks will have to rely upon the public purses in their home countries. Yet the weakest banking industries are in the countries with the weakest public finances, such as Italy. The danger is that the asset review becomes another euro-fudge, which does not sever the link between shaky banks and shaky sovereigns.
If Europe fails to seize the opportunity to sort out its banks, then it will fit into a disappointing yet familiar pattern. The euro area may no longer be in mortal danger of breaking up. But it will increasingly resemble a joyless union whose members stay together only for fear of a more painful separation :ranger:
Europe: Teenage sulks | The Economist
santosh10
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@Ray
sir, one more example of impossible Germany is as below :ranger:
=> and even after so many Budget cuts, this is how Government Debt varies in Euro-zone. EU17-Eurozone is on two-ways, one on the side of Germany with reducing debt while others on the opposite direction
=>
=> and yes, Germany on the bottom in this table too....
sir, one more example of impossible Germany is as below :ranger:
=> and even after so many Budget cuts, this is how Government Debt varies in Euro-zone. EU17-Eurozone is on two-ways, one on the side of Germany with reducing debt while others on the opposite direction
Is the Eurozone crisis over? Or is it quietly getting worse?
=>
=> and yes, Germany on the bottom in this table too....
Last edited by a moderator:
santosh10
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@Ray
also here, we have the latest comparison of GDP of different Eurozone Economies since 2008 recession, as below :ranger:
Europe's endless recession, in one chart - The Washington Post
=> something which matters the most in today's world as below :ranger:
before you increase GDP size, how much do you really have to pay back to the debtors? this is how BRIC is positioned with the major OECD economies, as below :thumb:
Total Debt on the Major Economies of World
=> and here, we do know, 110% Government Debt to GDP ratio of US means for $55,000 debt per civilians to date
National Debt on Countries
Country List Government Debt to GDP
also here, we have the latest comparison of GDP of different Eurozone Economies since 2008 recession, as below :ranger:
Europe's endless recession, in one chart - The Washington Post
=> something which matters the most in today's world as below :ranger:
before you increase GDP size, how much do you really have to pay back to the debtors? this is how BRIC is positioned with the major OECD economies, as below :thumb:
Total Debt on the Major Economies of World
=> and here, we do know, 110% Government Debt to GDP ratio of US means for $55,000 debt per civilians to date
National Debt on Countries
Country List Government Debt to GDP
Last edited by a moderator:
santosh10
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UK economy finally returns to pre-crisis level
25 Jul 2014
Second quarter GDP growth of 0.8pc means total economic output was 0.2pc points bigger than in the first quarter of 2008, its previous peak :thumb:
Britain's economy is now bigger than it was at its pre-financial crisis peak, after official data showed gross domestic product increased by 0.8pc in the second quarter of the year.
The growth was driven by the dominant services sector – which accounts for almost four-fifths of the British economy – and was 1pc larger in the quarter compared with the same period last year, according to the Office for National Statistics.
Output in the production sector, which accounts for about 15pc of the economy, rose by 0.4pc. However, output in construction – 6pc of the British economy – contracted by 0.5pc over the period, and agriculture – less than 1pc of the economy, fell 0.2pc.
The overall growth – which was widely predicted – means the UK economy is now 0.2pc bigger than its previous peak, which was hit in the first three months of 2008. On an annual basis, GDP rose by 3.1pc in the quarter, the fastest pace of growth since late 2007.
The size of the contraction from peak to the trough in 2009 was 7.2pc.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "Given that it has taken more than six years for the economy to get ahead of where it was in 2008 and the economy is still only 0.2pc larger, any celebrations should be qualified... but at least we can finally celebrate this fact."
He added that there was some concern that the growth was driven by the services sector, despite the Government's drive to "rebalance" the economy towards manufacturing.
Britain's dominant services sector powers more than three-quarters of the UK economy.
However, Britain's economy could well have grown past its previous peak several months ago, according to Peter Spencer, chief economic adviser to the EY ITEM Club. He pointed out that revisions to the methodology by which GDP is measured that are due out in September – such as taking items from the "black economy" such as prostitution and drug dealing – could show "we sailed past the previous peak long before". :ranger:
Joe Grice, chief economic adviser at the ONS, said: "The economy has now shown significant growth in six consecutive quarters and the long climb back to the pre-crisis peak of 2008 has at last been completed. It is worth noting, however, that changes this autumn to the way countries measure their GDPs may yet modify our view of how slow the UK's recovery has been."
Although Britain's economy is now powering ahead – on Thursday the International Monetary Fund upgraded its forecast for the UK, predicting growth in 2014 will 3.2pc this year, an increase of 0.4 points that takes Britain ahead of all other developed nations – it has taken a long time to reach this point. :thumb:
"It has been a long slog, with the UK the second to last member of the G7 group of economies to reach the milestone and taking much longer to rebound than in past recessions," said Guy Ellision, of head of UK equities at Investec Wealth & Investment.
Germany passed its pre-crisis peak in 2010 and France and the US followed the next year. The slow pace of Britain's recovery from the crisis is partly because of the size of its banking sector, which took a huge hit in the financial crisis. But critics of the government say it is also because finance minister George Osborne opted for sharp curbs on public spending to rein in the country's large budget deficit.
The British Chambers of Commerce also sounded a cautious note, warning that growth cannot be taken for granted.
"The fact that Britain's economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike," said John Longworth, the organisation's director-general. "Yet even though we're one of the fastest-growing developed economies, there's no room for complacency.
"Without sustained action, these growth figures could be 'as good as it gets' for the UK. The Government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren't seen as a safe bet by the banks."
He added that he wanted to see interest rates stay low for as long as possible and when they do go up to rise "slowly and predictably" to avoid "undermining the solid business confidence that's driving growth".
However, some economics commentators warned that the consumer and business spending that is driving the growth could cause rates to rise.
"The GDP figures mark a concrete expansion of the UK economy to surpass pre-crisis levels and we expect upwards revisions to the data in the coming months," said Gautam Batra, investment strategist at Signia Wealth. "A pick up in investment spending combined with strong consumer spending will no doubt put further pressure on the MPC to consider rate increases sooner rather than later."
GDP per person is only expected to return to pre-crisis levels in 2017, reflecting growth in the population and the country's stubbornly weak productivity since 2008, according to Britain's independent budget forecasters. :ranger:
The ONS's preliminary estimates of GDP do not include a breakdown of spending. They are the first released in the European Union, and are based partly on estimated data.
UK economy finally returns to pre-crisis level - Telegraph
25 Jul 2014
Second quarter GDP growth of 0.8pc means total economic output was 0.2pc points bigger than in the first quarter of 2008, its previous peak :thumb:
Britain's economy is now bigger than it was at its pre-financial crisis peak, after official data showed gross domestic product increased by 0.8pc in the second quarter of the year.
The growth was driven by the dominant services sector – which accounts for almost four-fifths of the British economy – and was 1pc larger in the quarter compared with the same period last year, according to the Office for National Statistics.
Output in the production sector, which accounts for about 15pc of the economy, rose by 0.4pc. However, output in construction – 6pc of the British economy – contracted by 0.5pc over the period, and agriculture – less than 1pc of the economy, fell 0.2pc.
The overall growth – which was widely predicted – means the UK economy is now 0.2pc bigger than its previous peak, which was hit in the first three months of 2008. On an annual basis, GDP rose by 3.1pc in the quarter, the fastest pace of growth since late 2007.
The size of the contraction from peak to the trough in 2009 was 7.2pc.
Howard Archer, chief UK and European economist at IHS Global Insight, said: "Given that it has taken more than six years for the economy to get ahead of where it was in 2008 and the economy is still only 0.2pc larger, any celebrations should be qualified... but at least we can finally celebrate this fact."
He added that there was some concern that the growth was driven by the services sector, despite the Government's drive to "rebalance" the economy towards manufacturing.
Britain's dominant services sector powers more than three-quarters of the UK economy.
However, Britain's economy could well have grown past its previous peak several months ago, according to Peter Spencer, chief economic adviser to the EY ITEM Club. He pointed out that revisions to the methodology by which GDP is measured that are due out in September – such as taking items from the "black economy" such as prostitution and drug dealing – could show "we sailed past the previous peak long before". :ranger:
Joe Grice, chief economic adviser at the ONS, said: "The economy has now shown significant growth in six consecutive quarters and the long climb back to the pre-crisis peak of 2008 has at last been completed. It is worth noting, however, that changes this autumn to the way countries measure their GDPs may yet modify our view of how slow the UK's recovery has been."
Although Britain's economy is now powering ahead – on Thursday the International Monetary Fund upgraded its forecast for the UK, predicting growth in 2014 will 3.2pc this year, an increase of 0.4 points that takes Britain ahead of all other developed nations – it has taken a long time to reach this point. :thumb:
"It has been a long slog, with the UK the second to last member of the G7 group of economies to reach the milestone and taking much longer to rebound than in past recessions," said Guy Ellision, of head of UK equities at Investec Wealth & Investment.
Germany passed its pre-crisis peak in 2010 and France and the US followed the next year. The slow pace of Britain's recovery from the crisis is partly because of the size of its banking sector, which took a huge hit in the financial crisis. But critics of the government say it is also because finance minister George Osborne opted for sharp curbs on public spending to rein in the country's large budget deficit.
The British Chambers of Commerce also sounded a cautious note, warning that growth cannot be taken for granted.
"The fact that Britain's economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike," said John Longworth, the organisation's director-general. "Yet even though we're one of the fastest-growing developed economies, there's no room for complacency.
"Without sustained action, these growth figures could be 'as good as it gets' for the UK. The Government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren't seen as a safe bet by the banks."
He added that he wanted to see interest rates stay low for as long as possible and when they do go up to rise "slowly and predictably" to avoid "undermining the solid business confidence that's driving growth".
However, some economics commentators warned that the consumer and business spending that is driving the growth could cause rates to rise.
"The GDP figures mark a concrete expansion of the UK economy to surpass pre-crisis levels and we expect upwards revisions to the data in the coming months," said Gautam Batra, investment strategist at Signia Wealth. "A pick up in investment spending combined with strong consumer spending will no doubt put further pressure on the MPC to consider rate increases sooner rather than later."
GDP per person is only expected to return to pre-crisis levels in 2017, reflecting growth in the population and the country's stubbornly weak productivity since 2008, according to Britain's independent budget forecasters. :ranger:
The ONS's preliminary estimates of GDP do not include a breakdown of spending. They are the first released in the European Union, and are based partly on estimated data.
UK economy finally returns to pre-crisis level - Telegraph
santosh10
Senior Member
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@Ray
as in the above curve, we find Per Capita Income of US hardly around at its Pre-Crisis level by 2013, which might be because of the fact that population growth rate of US is well closed to 1.0% a year, hence GDP level at 5-6% higher than its pre-crisis level still keep it's Per Capita Income on the same level, along with hefty debt borrowing making its national debt well closed to 110% to date. while national debt of Russia is well below 10% to GDP, hence leaving enough space to borrow in future for infrastructure investments etc......
here we just discussed, as in the last post#9 too, even if UK's economy has recovered its pre-crisis level after 6 years, its Per Capita Income adjusting inflation is still around 4.5% less than its early 2008 level, considering around 0.7% population growth rate since then.....
here we give example of Asian Emerging Economies like Philippines, Vietnam, India, Indonesia etc, whose average growth rate was well over 6.5% a year since early 2008, hence increasing per capita income by over 50%+ during this 6 years period, adjusting inflation :ranger:
we find growth rate of India doing good during 2008 to 2011, and then it came down since 2012....
India GDP Annual Growth Rate | 1951-2014 | Data | Chart | Calendar
Indonesia GDP Annual Growth Rate | 2000-2014 | Data | Chart | Calendar
Philippines GDP Annual Growth Rate | 2001-2014 | Data | Chart | Calendar
Vietnam GDP Annual Growth Rate | 2000-2014 | Data | Chart | Calendar
=> also, when a developed economy like OECD members reach 90%+ Debt/GDP level, it has to make many expenditure cuts, which then reduce its further growth in future.and the way UK's National Debt is well over 95%+ to date, it itself states that any further growth prospects have been undermined by a big margin.......
Britain's debt mountain reaches £1.39TRILLION, equivalent to 90% of the entire economy, ONS reveals | Daily Mail Online
=>
Deficit, national debt and government borrowing - how has it changed since 1946?
Deficit, national debt and government borrowing - how has it changed since 1946? | News | theguardian.com
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santosh10
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Debt crisis has left Germany vulnerable
During her successful re-election campaign, Chancellor Angela Merkel's message was that Germans were living in a prosperous, recession-proof economy and the eurozone problems were contained. But Germany's economic power and financial strength is overstated.
Germany remains dependent on its neighbours, with 69 per cent of total exports going to European countries, including 57 per cent to the member states of the European Union.
In 2012, Germany ran a trade deficit of €27bn with Russia, Libya and Norway, mainly for energy imports. Germany also had trade deficits with Japan (€4.7bn) and China (€11.7bn). In contrast, Germany had a trade surplus with the eurozone (France, Italy, Spain, Greece, Portugal, Cyprus and Ireland) of €54.6bn.
Continued weakness in these troubled countries will affect German economic prospects. High energy prices and increasing stresses in emerging markets will exacerbate its problems.
Eurozone members remain committed to avoiding the unknown risks of a default and departure of countries from the euro.
Governments in the at-risk economies are unlikely to meet agreed budget deficit or debt level targets. Banks will face rising bad debt losses and require capital infusions. For both weaker sovereigns and banks, access to financial markets will remain restricted. Cost of commercial funding will remain above affordable levels, meaning that assistance will be needed.
Greater reliance on ESM
Peripheral countries will be forced to rely on the European Stability Mechanism and European Central Bank to provide financing directly or indirectly via cheap funds to banks to purchase government bonds which will be used as collateral for the central bank loans.
National central banks will also use the "Target 2" payment system to settle cross-border funds flows between eurozone countries financing peripheral countries without access to money markets to fund trade deficits and capital flight.
Over time, financing will become concentrated in official agencies, the ECB and national governments or central banks. Risk will shift from the peripheral countries to the core of the eurozone, especially Germany and France. :ranger:
For example, the ESM relies primarily on the support of four countries: Germany (27.1 per cent), France (20.4 per cent), Italy (17.9 per cent) and Spain (11.9 per cent). If Spain or Italy needs assistance, then the contingent commitment of the remaining countries, especially France and Germany, would increase. :ranger:
This reflects the reality that the stronger countries stand behind each of the support mechanisms.
German guarantees supporting the existing bailout fund are €211bn. The ESM will require a capital contribution from Germany. If the ESM lends its full commitment of €500bn and the recipients default, Germany's liability could be as high as €280bn. There is also indirect exposure via the ECB and the Target 2 claims.
The size of these exposures is large, in relation to Germany's GDP of around €2.5tn and German household assets estimated at €4.7tn.
Germany also has substantial levels of its own debt (over 80 per cent of GDP). German demographics, with an ageing population and deteriorating dependency ratios, compound its problems.
If unfunded social security liabilities are taken into account, then the level of German debt increases to over 190 per cent of GDP.
Transfer of risk
At best, increased commitments to support its European partners will absorb German savings, crippling the economy. At worst, default of one of the weaker countries or a restructuring of the euro will result in large losses to Germany; the best estimates are in the range of €750bn to €1,500bn.
Voters seem unaware that each step in the crisis has resulted in a transfer of risk, liability and losses to Germany. Given strong opposition to debt pooling and institutionalised structural wealth transfers, their reaction to eventual revelation of this increasing commitment and their status as the "permanent creditor" within Europe is unknown.
Germany's history is one of monumental reverses and extremes. Miscalculations and errors in the handling of the eurozone debt crisis have left it vulnerable to another one of these events.
Anxious to maintain their relative prosperity and central place in Europe, Germans have sought to avoid the reality of their predicament. But as C.S. Lewis advised: "If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only soft soap and wishful thinking to begin, and in the end, despair."
Debt crisis has left Germany vulnerable - FT.com
Debt crisis has left Germany vulnerable - FT.com
Debt crisis has left Germany vulnerable - FT.com
During her successful re-election campaign, Chancellor Angela Merkel's message was that Germans were living in a prosperous, recession-proof economy and the eurozone problems were contained. But Germany's economic power and financial strength is overstated.
Germany remains dependent on its neighbours, with 69 per cent of total exports going to European countries, including 57 per cent to the member states of the European Union.
In 2012, Germany ran a trade deficit of €27bn with Russia, Libya and Norway, mainly for energy imports. Germany also had trade deficits with Japan (€4.7bn) and China (€11.7bn). In contrast, Germany had a trade surplus with the eurozone (France, Italy, Spain, Greece, Portugal, Cyprus and Ireland) of €54.6bn.
Continued weakness in these troubled countries will affect German economic prospects. High energy prices and increasing stresses in emerging markets will exacerbate its problems.
Eurozone members remain committed to avoiding the unknown risks of a default and departure of countries from the euro.
Governments in the at-risk economies are unlikely to meet agreed budget deficit or debt level targets. Banks will face rising bad debt losses and require capital infusions. For both weaker sovereigns and banks, access to financial markets will remain restricted. Cost of commercial funding will remain above affordable levels, meaning that assistance will be needed.
Greater reliance on ESM
Peripheral countries will be forced to rely on the European Stability Mechanism and European Central Bank to provide financing directly or indirectly via cheap funds to banks to purchase government bonds which will be used as collateral for the central bank loans.
National central banks will also use the "Target 2" payment system to settle cross-border funds flows between eurozone countries financing peripheral countries without access to money markets to fund trade deficits and capital flight.
Over time, financing will become concentrated in official agencies, the ECB and national governments or central banks. Risk will shift from the peripheral countries to the core of the eurozone, especially Germany and France. :ranger:
For example, the ESM relies primarily on the support of four countries: Germany (27.1 per cent), France (20.4 per cent), Italy (17.9 per cent) and Spain (11.9 per cent). If Spain or Italy needs assistance, then the contingent commitment of the remaining countries, especially France and Germany, would increase. :ranger:
This reflects the reality that the stronger countries stand behind each of the support mechanisms.
German guarantees supporting the existing bailout fund are €211bn. The ESM will require a capital contribution from Germany. If the ESM lends its full commitment of €500bn and the recipients default, Germany's liability could be as high as €280bn. There is also indirect exposure via the ECB and the Target 2 claims.
The size of these exposures is large, in relation to Germany's GDP of around €2.5tn and German household assets estimated at €4.7tn.
Germany also has substantial levels of its own debt (over 80 per cent of GDP). German demographics, with an ageing population and deteriorating dependency ratios, compound its problems.
If unfunded social security liabilities are taken into account, then the level of German debt increases to over 190 per cent of GDP.
Transfer of risk
At best, increased commitments to support its European partners will absorb German savings, crippling the economy. At worst, default of one of the weaker countries or a restructuring of the euro will result in large losses to Germany; the best estimates are in the range of €750bn to €1,500bn.
Voters seem unaware that each step in the crisis has resulted in a transfer of risk, liability and losses to Germany. Given strong opposition to debt pooling and institutionalised structural wealth transfers, their reaction to eventual revelation of this increasing commitment and their status as the "permanent creditor" within Europe is unknown.
Germany's history is one of monumental reverses and extremes. Miscalculations and errors in the handling of the eurozone debt crisis have left it vulnerable to another one of these events.
Anxious to maintain their relative prosperity and central place in Europe, Germans have sought to avoid the reality of their predicament. But as C.S. Lewis advised: "If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only soft soap and wishful thinking to begin, and in the end, despair."
Debt crisis has left Germany vulnerable - FT.com
Debt crisis has left Germany vulnerable - FT.com
Debt crisis has left Germany vulnerable - FT.com
santosh10
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as in the above FT's news, in place of discussing, who buy German products, who has deficit with Germany and who maintain surplus over them, and whether this means for sharing debt of each others too, to help them keep buying German products this way
=> also, we find India also having high trade deficit with EU28 as below :ranger:
=> also, we find India also having high trade deficit with EU28 as below :ranger:
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santosh10
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@RayIn 2012, Germany ran a trade deficit of €27bn with Russia, Libya and Norway, mainly for energy imports. Germany also had trade deficits with Japan (€4.7bn) and China (€11.7bn). In contrast, Germany had a trade surplus with the eurozone (France, Italy, Spain, Greece, Portugal, Cyprus and Ireland) of €54.6bn.
For example, the ESM relies primarily on the support of four countries: Germany (27.1 per cent), France (20.4 per cent), Italy (17.9 per cent) and Spain (11.9 per cent). If Spain or Italy needs assistance, then the contingent commitment of the remaining countries, especially France and Germany, would increase. :ranger:
Debt crisis has left Germany vulnerable - FT.com
its not funny but government can't run business, its almost impossible for Ms Merkel to understand how a competent product is made, along with price based competitive advantage and then its marketing is done on the world market to get order, to run business. how will the above concept come true?
government simply can't run business
. its a simple case that German companies are doing good as compare to its OECD rivals and hence its benefiting the nation :ranger:
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santosh10
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@Ray
also, sir its interesting to see that UK was the largest source of import for India till 2001, while its not even in top 10 at present. as in the news of WSJ as below :ranger:
we would bring them back to top 5 at least, say by 2020 :thumb:
also, sir its interesting to see that UK was the largest source of import for India till 2001, while its not even in top 10 at present. as in the news of WSJ as below :ranger:
we would bring them back to top 5 at least, say by 2020 :thumb:
New Delhi is frustrated that trade talks launched when Chinese Premier Wen Jiabao visited India in late 2010 haven't yielded significant benefits.India's trade deficit with China jumped 42% to nearly $40 billion in the last fiscal year ended March 31, and was the largest contributor to the country's overall gap between exports and imports.
Trade Gap Strains India-China Ties - WSJ
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jouni
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I did not know that Finland was so high on the list. Why has this been hidden from the public by our government. They should promote these positive news, instead of all the negstive euro news.Teenage sulks
Nov 18th 2013
Aged 15, the euro will remain a difficult adolescent
After four years of crisis-fighting, European leaders have the chance to build more solid foundations for their shaky currency zone by sorting out its wobbly banks in 2014. They are more likely to fumble this opportunity than to seize it wholeheartedly. As before, they will do enough to keep the single currency intact but not enough to make it work properly. :ranger:
The year will begin on a high note as Latvia becomes the 18th state to join a currency union that started in 1999 with just 11 members (see article). The decision of this small Baltic country is as much political as economic, as it seeks to curb Russian influence by embedding itself more deeply in Europe. But after all the fears about a "Grexit", Eurocrats will still hail the expansion as a vote of confidence in the euro. And it will come after an earlier boost at the end of 2013, as Ireland becomes the first economy to leave its bail-out programme and return to market financing (though it may still require help through a credit line).
In contrast with these northern lights, the outlook for the bailed-out economies of Greece, Portugal and Cyprus will remain a southern cross. Greece will be lucky to escape a seventh year of recession, and will require extra loans to meet its financing needs in 2014 and 2015: a third bail-out. And, even though Greece has defaulted on a record amount of sovereign bonds, its public debt will be oppressively high, at 175% of GDP. Further debt relief will come to the fore in 2014. Since most of the debt is now owed to other euro-zone countries, that will pose tricky questions, especially for Germany, the biggest creditor, which will do its utmost to avoid outright forgiveness for fear that other rescued countries will clamour for similar treatment.
Euro-zone GDP is expected to expand in 2014 by only a modest 1%
Portugal for its part is heading for a second bail-out. A deep recession caused a political crisis in 2013, which undermined investor confidence, causing hopes for a return to market financing in mid-2014 to recede. But it is Cyprus that will suffer the most. Output will decline cumulatively in 2013 and 2014 by over 12%, according to the IMF, which notes that the fall could exceed 20% in "adverse" circumstances. The main worry is that the recapitalisation of the Bank of Cyprus using uninsured deposits will prove to be inadequate as bad debts surge. :ranger:
A chance to grow up
These setbacks in small southern countries will be manageable if the euro zone can sustain and strengthen the recovery that started in the spring of 2013, with the upswing spreading from Germany to include the big Mediterranean economies of Italy and Spain. One worry is that the German export machine may run slow if Chinese growth falters. Another is that a dearth of credit will hold back smaller Italian and Spanish firms. Even if these risks can be averted, euro-zone GDP is expected to expand in 2014 by only a modest 1%, leaving output still below its peak in 2008. That overall figure disguises how badly some economies like Italy and Portugal have done since the introduction of the euro in 1999 (see chart).
There is an opportunity nonetheless for European leaders to build a basis for stronger sustained growth. The European Central Bank will become the supervisor of the zone's biggest banks in late 2014. Before that, in the first half of the year, it will conduct a searching investigation of their books. This asset-quality review is a chance to deal once and for all with the banking weaknesses that have interacted with unsustainable sovereign-debt burdens to make the euro crisis so intractable. The review could restore investors' faith in euro-zone banks, lowering their funding rates and enabling them to lend more freely to companies.
But if the review is to carry conviction (seearticle), it will prompt tough and potentially costly decisions: closing down banks that are no longer viable and injecting funds to plug capital gaps. That requires recourse if necessary to taxpayers, but Germany has blocked efforts to make this possible at the euro-area level; instead banks will have to rely upon the public purses in their home countries. Yet the weakest banking industries are in the countries with the weakest public finances, such as Italy. The danger is that the asset review becomes another euro-fudge, which does not sever the link between shaky banks and shaky sovereigns.
If Europe fails to seize the opportunity to sort out its banks, then it will fit into a disappointing yet familiar pattern. The euro area may no longer be in mortal danger of breaking up. But it will increasingly resemble a joyless union whose members stay together only for fear of a more painful separation :ranger:
Europe: Teenage sulks | The Economist
santosh10
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@journi
Any New 2008 type Recession would make a Difference in World
it was always good when we find one category of developed nations and one of 3rd world countries. things were easy to discuss, US/UK/Aus etc are always best places, and its your good luck if you may have even transit visa in Australia type developed countries. but now things changing and getting complex. for example, these so called Industrialized nations have already lost Industries to emerging markets to an extent and losing the remaining ones too with a constant pace. all the techs are getting common for emerging economies and they have at least 6.0%+ a year average growth even since 2008 recession.
while even if its rude to say, but this is how its going to be working. at 90%+ Debt to GDP level, UK and other EU's economies have to make many spending cuts., which would have undermined any further growth prospects. even at 200% Debt to GDP level, an emerging economy would have reduced debt on long run, as it does grow by at least 6%+, with high inflation too. while EU at hardly 1.0%+ growth a year, would hardly match its population growth, while its Per Capita Income adjusting inflation is still around 5% lower than early 2008.....
its really not about saying wrong about any country, but there is a point on what i say. and the worse we will see if we get any other recession like 2008, dont get surprise but the issues of 2008 recession is still present. China type emerging economies have hollowed out the industries of OECD economies, in fact, and there is no sign that China is stoppable...... and if we get any 2008 type recession again, then i dont think they may again borrow debt in the same way like how they did since 2008. for example of UK, its national debt raised from 55% by early 2008 to 95%+ to date, and one more recession like the same will simply make then unanswerable.......
even National Debt of US and many of EU's economies is just doubled since early 2008 itself..
only Australia, Canada type mineral rich low population countries would have strong economic future, along with Japan, France, Germany type highly advanced countries would also withstand any new recession, i think. as, even if US with 320million+ people has been doing so much oil/gas pumping since 2009 itself, its National Debt level is well over 105%+ to date.....
=> and the main fun will be to see the circumstances when Industries back to many of today's OECD economies. very high debt they have put to date, and if the industries back, just one more recession is needed in this regard, then they will have very high inflation in beginning, which does mean for high interests payment on the debt they have borrowed to date........ we may see many funny things in coming years
things are so complex that, the interest payment would occur on the Total Debt, which may result in social unrest too in many of those countries :ranger:
Any New 2008 type Recession would make a Difference in World
it was always good when we find one category of developed nations and one of 3rd world countries. things were easy to discuss, US/UK/Aus etc are always best places, and its your good luck if you may have even transit visa in Australia type developed countries. but now things changing and getting complex. for example, these so called Industrialized nations have already lost Industries to emerging markets to an extent and losing the remaining ones too with a constant pace. all the techs are getting common for emerging economies and they have at least 6.0%+ a year average growth even since 2008 recession.
while even if its rude to say, but this is how its going to be working. at 90%+ Debt to GDP level, UK and other EU's economies have to make many spending cuts., which would have undermined any further growth prospects. even at 200% Debt to GDP level, an emerging economy would have reduced debt on long run, as it does grow by at least 6%+, with high inflation too. while EU at hardly 1.0%+ growth a year, would hardly match its population growth, while its Per Capita Income adjusting inflation is still around 5% lower than early 2008.....
its really not about saying wrong about any country, but there is a point on what i say. and the worse we will see if we get any other recession like 2008, dont get surprise but the issues of 2008 recession is still present. China type emerging economies have hollowed out the industries of OECD economies, in fact, and there is no sign that China is stoppable...... and if we get any 2008 type recession again, then i dont think they may again borrow debt in the same way like how they did since 2008. for example of UK, its national debt raised from 55% by early 2008 to 95%+ to date, and one more recession like the same will simply make then unanswerable.......
even National Debt of US and many of EU's economies is just doubled since early 2008 itself..
only Australia, Canada type mineral rich low population countries would have strong economic future, along with Japan, France, Germany type highly advanced countries would also withstand any new recession, i think. as, even if US with 320million+ people has been doing so much oil/gas pumping since 2009 itself, its National Debt level is well over 105%+ to date.....
=> and the main fun will be to see the circumstances when Industries back to many of today's OECD economies. very high debt they have put to date, and if the industries back, just one more recession is needed in this regard, then they will have very high inflation in beginning, which does mean for high interests payment on the debt they have borrowed to date........ we may see many funny things in coming years
things are so complex that, the interest payment would occur on the Total Debt, which may result in social unrest too in many of those countries :ranger:
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santosh10
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further to the above news of NY Times, we have a news as below too :ranger:
Trends in U.S. Military Spending
Military budgets are only one gauge of military power. A given financial commitment may be adequate or inadequate depending on the number and capability of a nation's adversaries, how well a country invests its funds, and what it seeks to accomplish, among other factors. Nevertheless, trends in military spending do reveal something about a country's capacity for coercion. Policymakers are currently debating the appropriate level of U.S. military spending given increasingly constrained budgets and the winding down of wars in Iraq and Afghanistan. The following charts present historical trends in U.S. military spending and analyze the forces that may drive it lower.
These charts draw on data from the Stockholm International Peace Research Institute (SIPRI) and from the U.S. Bureau of Economic Analysis (BEA). Both data sets include spending on overseas contingency operations as well as defense. This distinguishes them from data used in the U.S. budget, which separates defense spending from spending on overseas operations.
In inflation-adjusted dollars, SIPRI's measure of U.S. military spending rose sharply after the terrorist attacks of 2001.
In calendar year 2012, military spending declined from $711 billion to $668 billion.
In dollar terms, this was the largest decline since 1991.
The reduction in U.S. operations in the Middle East and the sequester mean this figure is likely to fall again in 2013.
:ranger:
Democracies are generally regarded as friendly to the United States, and this chart delivers a similar verdict to the last one. :ranger:
In 2012, U.S. military spending fell faster than overall military spending by democracies.
Trends in U.S. Military Spending - Council on Foreign Relations
Trends in U.S. Military Spending - Council on Foreign Relations
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santosh10
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@Ray
also, its simple that there are very less political risks, easy financing, easy to do business etc, along with pretty good infrastructure we find in the developed countries. so there is no reason why can't they have 'triple A' rating, as compare to Emerging BRICS, who are in Yellow color, BBB, in the picture as below, except China....
but if we find Spain, Italy, Portugal, Ireland, Cyprus, Greece etc in Yellow in this picture then its all about the fact that they have got the 'new risk' of High Debts. the same we find in case of US, which is loosing its color too, less green it is now at AA+ only now, because of high debts of this newly introduced risk in world :ranger:
as above, the OECD economies losing their credit rating because of high debts, a new risk we find in world now. here, few factors governing these ratings is as below: :thumb:
also, its simple that there are very less political risks, easy financing, easy to do business etc, along with pretty good infrastructure we find in the developed countries. so there is no reason why can't they have 'triple A' rating, as compare to Emerging BRICS, who are in Yellow color, BBB, in the picture as below, except China....
but if we find Spain, Italy, Portugal, Ireland, Cyprus, Greece etc in Yellow in this picture then its all about the fact that they have got the 'new risk' of High Debts. the same we find in case of US, which is loosing its color too, less green it is now at AA+ only now, because of high debts of this newly introduced risk in world :ranger:
Dark Green - AAA
Light Green - AA
Celery - A
Yellow - BBB
Orange - BB
Red - B
Dark Red - CCC
Credit rating - Wikipedia, the free encyclopedia
as above, the OECD economies losing their credit rating because of high debts, a new risk we find in world now. here, few factors governing these ratings is as below: :thumb:
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santosh10
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while i personally find BRICS economies in Yellow colors in the above pictures of Credit Rating, BBB, mainly because of poor Infrastructures as compare to OECD economies. and here we have a reason to see China in Light Green, A+, as below 
China, which accounts for more than half of that $6 trillion estimate, ranks far above emerging peers in terms of infrastructure at the 65th percentile. :thumb:
Emerging Markets Are Going To Spend A Massive $6 Trillion On Infrastructure In The Next Three Years - Business Insider
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