The French government faces a confidence vote in the national assembly after President Francois Hollande and his prime minister, Manuel Valls, ousted dissident ministers in a signal perhaps that they are prepared to push ahead with unpopular structural reforms to breathe life into a moribund economy.
As Federal Reserve Chairman Ben Bernanke delivered what may have been his last testimony on monetary policy before Congress, most of the world’s attention was focused on what hints he might give about the timing of an eventual reduction in the pace of asset purchases.
It doesn’t sound sustainable but, at least in coming months, businesses look set to keep booming even as consumers come under pressure – in line with the recent trend. That’s because the economic hit from the partial deal on the fiscal cliff will hurt salaried workers disproportionately, says Steven Ricchiuto, chief economist at Mizuho.
Judging by the heated political rhetoric, you would think there is a great divide in America over the proper role of government. The drama is played out in battles over budgetary policy where one side wants low taxes and small government, and the other favors taxing the rich to pay for government programs.
from Summit Notebook:
The U.S. economy is experiencing an ongoing but slow recovery, says Barry Ritholtz, director of equity research at Fusion IQ. But that's not stopping him from enjoying discounted prices in a low-inflation environment, at least when it comes to his personal spending habits. The world is on sale if you've got the money to spend, he told the Reuters Investment Outlook summit in New York when asked, for example, if he might spend less while on a vacation or forego a purchase or two.
Be careful this week about buying wholeheartedy into any G20-related spin about supposedly savvy, free-spending Britain and America doing more to combat the world economic crisis than supposedly stubborn, overly cautious Germany and France. The actual figures show it is much more complex than that.