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from Breakingviews:
Global trade surplus: proof of alien life?
By Andy Mukherjee
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Mankind has spent centuries looking for signs of alien life. Now a French graduate student appears to have found evidence in an unusual spot: the ledgers of the world’s customs offices.
Gabriel Zucman, a Ph.D. candidate at the Paris School of Economics, has crunched together data for exports and imports from around the world. In theory, the two should cancel each other out. Yet Zucman’s estimates show that in 2007 the world’s current account was in surplus by $400 billion. That’s impossible, unless aliens are buying iPhones and iPads.
Graphic: World has a trade surplus
Sadly for believers in extraterrestrial life, there is a more mundane explanation. Zucman thinks the global trade surplus probably stems from errors in the accounts of developing countries. Another possibility is that trade may be disguising capital flows.
from Breakingviews:
Abenomics pulls Japan from its post-Lehman slump
By Andy Mukherjee
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Prime Minister Shinzo Abe’s policies have beaten back the Japanese economy’s post-Lehman blues. Breakingviews' Abenomics Index was at its highest level in March since September 2008. And that was before the Bank of Japan launched its bold money-printing pledge.
from Breakingviews:
Record aircraft orders point to global growth bump
By Andy Mukherjee
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
The aviation industry’s incurable optimism is like a seatbelt sign for investors. That’s the conclusion of a Breakingviews study of global airline orders and economic growth. Aggressive aircraft orders have an inverse relationship with expansion in global GDP a year later. If that affiliation holds, big orders by Asian airlines point to rising risks of economic turbulence next year.
from MacroScope:
Hopefulness, not confidence, is spreading through the euro zone
Optimism in Germany is roaring and consumers across the euro zone are starting to become less gloomy. But the latest hard economic data are a reminder of the difference between confidence that things are going to get better, and the hope that they will.
For the moment, we only have the latter.
Friday's German Ifo business climate survey topped even the highest expectations, as did the ZEW economic sentiment indicator on Tuesday. Euro zone consumer confidence improved this month too, and the mood in financial markets has been largely buoyant since the start of the year.
from Breakingviews:
G7 only adds to global currency confusion
By Edward Hadas
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The G7 has spoken about the troubled foreign exchange markets, and the world is marginally less secure for it. In Tuesday’s four-sentence statement, the finance ministers and central bankers of the world’s leading economies managed to ignore the problem of inadvertent competitive devaluations, contradict themselves and make an empty promise.
from Breakingviews:
Surprisingly weak U.S. GDP has silver linings
By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The surprisingly weak U.S. economic output in the fourth quarter contains more than a few silver linings. The nation’s GDP declined at an annualized rate of 0.1 percent, defying expectations of at least 1 percent growth, according to economists polled by Thomson Reuters. Lower government spending accounted for a big slug of the contraction while private consumption and income improved. There’s really little cause for alarm.
from Breakingviews:
China “hard landing” talk abates, but not for long
By John Foley
The author is a Breakingviews columnist. The opinions expressed are his own.
China’s hard landing is the catastrophe that wasn’t. A return to expansion in the closely watched official survey of purchasing managers released on Nov. 1 leaves the Chinese economy on track for GDP growth of around 7.5 percent for 2012. The Breakingviews Tea Leaf Index, which combines a more eclectic group of indicators, also showed that conditions are improving. But talk of a punishing downturn will recur, because China’s economy remains unbalanced.
Breakingviews China Tea Leaf Index
The big threat to China’s growth remains real estate, which contributes roughly 15 percent of GDP, and in reality much more, through its effects on consumer goods sales, wages and confidence.
from MacroScope:
An unpleasant surprise may lurk in euro zone GDP numbers
The euro zone economy may be doing far worse than most economists want to believe. That’s not good news for a central bank trying to rescue the single currency through a hotly-contested bond purchasing programme that has yet to get started.
The latest flash purchasing managers’ indexes, which cover thousands of euro zone companies, suggest the third quarter will mark the euro zone’s worst economic performance since the dark days of early 2009, according to Markit, which compiles them.
from MacroScope:
India inflation consistently tough to pin down
High inflation is a drag on economic growth in the world’s second most populous country and matters immensely to over 400 million people, or over a third of India’s total population, who struggle to earn enough to feed their families three meals a day.
The particularly volatile nature of inflation in India has confounded policymakers and small business owners and has left economists, who are often running complex statistical models based on a dearth of reliable data, with a poor forecasting record.
from Breakingviews:
Uncle Sam still living well beyond his means
By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Uncle Sam just can’t seem to stop living beyond his means. While U.S. consumer credit failed to match its June 2008 peak, outstanding debt of domestic U.S. non-financial sectors still stands at nearly 250 percent of GDP, against 232 percent just before the financial crisis hit. While the consumer has deleveraged a bit, business debt is flat and government borrowing has soared. At some point, this just has to end.
Economists Carmen Reinhart and Kenneth Rogoff demonstrated that recessions preceded by a financial crash can be exceptionally deep and long, because of the reduction of debt that needs to occur before normal growth returns. Since 2008, with unprecedented levels of fiscal and monetary stimulus, no net U.S. deleveraging has occurred; rather the liabilities of non-financial sectors have grown faster than GDP. While households have cut back (partly through defaulting on mortgages and credit cards) from 97 percent of GDP to 83 percent, business debt kept pace with GDP and the government’s balance sheet has soared from 57 percent of GDP to 89 percent.
