The economic divergence between small business (as mentioned in the interview) and MNC’s is going to create a similar political divergence if it continues. The two interests traditionally have been on the same legislative page, but one could see that shift on some key matters – trade policy, for instance.
Burt
extend and pretend. The political class doesn’t want to break the real bad news. that the nation can’t keep going like this.
Thomas
Exactly….
All we are seeing both here and in Europe is a classic “kick the can down the road” game.
Dave
Much as I am sure Yves will (rightly) bristle at the first post, it was quite funny :) Likewise the pseudonym …
Yves – that picture of you at the top of the link says it all.
You seem to be out past aghast, heading toward appalled.
BTW: That link you had yesterday to the item from the Oil Drum wrt BP Macondo is the first I’ve seen that lays out the mechanics of the Matt Simmons doomsday scenario. Very important if true.
Great work.
Cookie Monster
about europe and recession. It seems china has taken great interest in Euro stability. They are signing huge projects (to pump money in). Of course largely still related to their commercial interest. But the number and financial risk they are taking is pretty noticeable. I am looking for raw number…
One of the agreements is a “memorandum of understanding” between China and Greece in the area of shipping, which would “foresee favourable chartering rates for Greek vessels”, the report said. Seven of the contracts were between Chinese shipping giant Cosco and Greek shipowners for the construction of new ships and the chartering of Greek vessels.
Agreements were also signed between Chinese group BCEGI and Greece’s Helios Plaza for the construction of a large hotel complex in Piraeus. Also, OTE telecom reached an agreement with China’s Huawei Technologies. Four Chinese food firms are also to begin importing Greek olive oil.
—
China and iceland also sign $.5B currency swap agreement. Obviously this is the first such swap in europe. This is a major lifeline for the icelandic.
Iceland has signed a currency swap deal worth over $500 million with China, Financial Times reports. Under the three-year agreement, Iceland can pay for Chinese imports in its own currency, the kronur.
Cookie Monster
Less than 24 hours after Moody’s slashed Greece’s sovereign rating to “junk” status, the government received a boost yesterday when the Chinese vice premier signed 14 investment deals with officials in Athens.
Zhang Dejiang, who signed the contracts at a ceremony in Athens where Deputy Prime Minister Theodoros Pangalos was present, said that Beijing wants to stand by Greece in its moment of crisis.
One of the agreements signed yesterday was a memorandum of understanding between the two countries in the area of shipping, which foresees favorable chartering rates for Greek vessels. Seven of the contracts were between Chinese shipping giant Cosco and Greek shipowners for the construction of new vessels and the chartering of Greek ships.
Cosco has already struck a deal with Greece to manage two container terminals at Piraeus for the next 35 years. The company’s chief executive, Wei Jiafu, said during a visit to Greece last month that Cosco has plans to turn Piraeus into the “greatest container hub in the eastern Mediterranean.”
China now own mediterranean. Shipping registries, major port access. Very well played. They are definitely positioning themselves very well for next boom.
Cookie Monster
So, the chinese is recycling their dollar. I would say this is in the range of %5-10 over few years. I can’t imagined what the chinese will do with such huge additional shipping capacity. They can move entire southern european dirt with and ship it to china if they want.
The agreements signed Tuesday include three between Greek shipping companies and Chinese transport giant Cosco for the construction of seven dry bulk cargo ships, with options for four more, and the chartering of another five.
Telecoms company OTE also signed an agreement with China’s Huawei Technologies, while food companies signed four agreements for the export of Greek olive oil to China.
No official figures were immediately available as to how much the deals were worth. Early reports put the value at more than€1bn.
——-
Under the terms of the agreement, China will invest approximately $5 billion to build new docks and upgrade loading systems in Greece’s port city of Piraeus. The modernization plans will help the port compete with other major European maritime spots. Greek officials hope that this round of improvements will benefit surrounding areas, too, particularly Athens, which lies just east of Piraeus. And Chinese officials are hoping to expand their global reach, creating or improving access to major commercial markets. Both sides hope this agreement will boost bilateral trade – now worth about $3.5 billion – back to levels seen before the financial crisis of 2009.
“By the way, the Dow Jones ESI suggests the U.S. economy has plateaued during the past six months at broadly the level that marks the border between recession and recovery. This suggests that once the effects of the inventory rebuild are taken out, the underlying trend for the U.S. economy is rather muted. And that it’s very vulnerable to another downturn.”
Doc Holiday
John seems to be a thoughtful dude:
John Hussman is out with his latest weekly and he discusses… the ECRI Leading Indicators of course. Everyone is talking about these numbers. He is bearish, but as I have also noted the ECRI data are not yet predicting recession.
U.S. Economic Update: Impact From Katrina Big, But How Big
“The impact of a hurricane on GDP is somewhat non-intuitive. The near-term disruption cuts
real GDP in the quarter of the hurricane. The damage is limited, however, since activity
usually revives quickly after such an event and the expenditures on repair, rescue and
reconstruction are offsets. The real damage is done to net domestic product (NDP), which
nets out the actual damages as capital consumption. NDP is really a better measure of
economic welfare than GDP, but is quoted much less. Incomes will drop sharply, as rents,
profits, and entrepreneurial income is reduced by the amount of the uninsured damage. The
insured damage cuts profits of insurance companies. These impacts are in addition to the lost
output caused by companies closing down for the hurricane and its aftermath. The result will
be an even more negative saving rate in the third quarter.”
The key take away: “The policy rescues since that prediction came true have not addressed the fundamental cause of the crisis, which was the excessive level of private debt.”
“Conclusion: The core propositions shared by the Bezemer-Fullbrook group were that the superficially good economic performance during “The Great Moderation” was driven by a debt-financed speculative bubble, which would necessarily burst because the debt added to the economy’s servicing costs without increasing its capacity to finance those costs. At some stage, the growth of unproductive debt had to falter, and when it did a serious financial crisis would ensue as aggregate demand collapsed. The policy rescues since that prediction came true have not addressed the fundamental cause of the crisis, which was the excessive level of private debt. The deleveraging that the Group predicted has thus been slowed to some degree by government action, but the need for that deleveraging has not been removed. As Figure 13 in particular emphasizes, the scale of that potential deleveraging appears certain to exceed that experienced in the Great Depression.”
Vangel
Has anyone noticed how much better BNN is than CNBC?
You look hot ! What is double dip?
Yves, you were excellent
Capitalism needs consumers_too spend_+(go into more debt), they are buggered…the GOM blob is playing our tune…http://www.youtube.com/watch?v=6bdohpu1ZRA&feature=related
Skippy…Fillet of Soul, so apropos…party whilst you can.
Point. No more need be said. Case closed.
The economic divergence between small business (as mentioned in the interview) and MNC’s is going to create a similar political divergence if it continues. The two interests traditionally have been on the same legislative page, but one could see that shift on some key matters – trade policy, for instance.
extend and pretend. The political class doesn’t want to break the real bad news. that the nation can’t keep going like this.
Exactly….
All we are seeing both here and in Europe is a classic “kick the can down the road” game.
Much as I am sure Yves will (rightly) bristle at the first post, it was quite funny :) Likewise the pseudonym …
http://www.abc.net.au/news/video/2010/05/20/2905304.htm
Yves – that picture of you at the top of the link says it all.
You seem to be out past aghast, heading toward appalled.
BTW: That link you had yesterday to the item from the Oil Drum wrt BP Macondo is the first I’ve seen that lays out the mechanics of the Matt Simmons doomsday scenario. Very important if true.
Great work.
about europe and recession. It seems china has taken great interest in Euro stability. They are signing huge projects (to pump money in). Of course largely still related to their commercial interest. But the number and financial risk they are taking is pretty noticeable. I am looking for raw number…
http://www.sofiaecho.com/2010/06/16/918011_china-agrees-to-invest-in-greece-in-spite-of-moodys-downgrade
One of the agreements is a “memorandum of understanding” between China and Greece in the area of shipping, which would “foresee favourable chartering rates for Greek vessels”, the report said. Seven of the contracts were between Chinese shipping giant Cosco and Greek shipowners for the construction of new ships and the chartering of Greek vessels.
Agreements were also signed between Chinese group BCEGI and Greece’s Helios Plaza for the construction of a large hotel complex in Piraeus. Also, OTE telecom reached an agreement with China’s Huawei Technologies. Four Chinese food firms are also to begin importing Greek olive oil.
—
China and iceland also sign $.5B currency swap agreement. Obviously this is the first such swap in europe. This is a major lifeline for the icelandic.
http://www.emii.com/Articles/2592908/Derivatives/Top-Stories/Iceland-China-Sign-500M-Currency-Swap.aspx
Iceland has signed a currency swap deal worth over $500 million with China, Financial Times reports. Under the three-year agreement, Iceland can pay for Chinese imports in its own currency, the kronur.
Less than 24 hours after Moody’s slashed Greece’s sovereign rating to “junk” status, the government received a boost yesterday when the Chinese vice premier signed 14 investment deals with officials in Athens.
Zhang Dejiang, who signed the contracts at a ceremony in Athens where Deputy Prime Minister Theodoros Pangalos was present, said that Beijing wants to stand by Greece in its moment of crisis.
One of the agreements signed yesterday was a memorandum of understanding between the two countries in the area of shipping, which foresees favorable chartering rates for Greek vessels. Seven of the contracts were between Chinese shipping giant Cosco and Greek shipowners for the construction of new vessels and the chartering of Greek ships.
Cosco has already struck a deal with Greece to manage two container terminals at Piraeus for the next 35 years. The company’s chief executive, Wei Jiafu, said during a visit to Greece last month that Cosco has plans to turn Piraeus into the “greatest container hub in the eastern Mediterranean.”
http://www.ekathimerini.com/4dcgi/_w_articles_politics_100010_16/06/2010_117719
China now own mediterranean. Shipping registries, major port access. Very well played. They are definitely positioning themselves very well for next boom.
So, the chinese is recycling their dollar. I would say this is in the range of %5-10 over few years. I can’t imagined what the chinese will do with such huge additional shipping capacity. They can move entire southern european dirt with and ship it to china if they want.
http://www.telegraph.co.uk/finance/7829889/China-invests-billions-of-euros-in-debt-laden-Greece.html
The agreements signed Tuesday include three between Greek shipping companies and Chinese transport giant Cosco for the construction of seven dry bulk cargo ships, with options for four more, and the chartering of another five.
Telecoms company OTE also signed an agreement with China’s Huawei Technologies, while food companies signed four agreements for the export of Greek olive oil to China.
No official figures were immediately available as to how much the deals were worth. Early reports put the value at more than€1bn.
——-
Under the terms of the agreement, China will invest approximately $5 billion to build new docks and upgrade loading systems in Greece’s port city of Piraeus. The modernization plans will help the port compete with other major European maritime spots. Greek officials hope that this round of improvements will benefit surrounding areas, too, particularly Athens, which lies just east of Piraeus. And Chinese officials are hoping to expand their global reach, creating or improving access to major commercial markets. Both sides hope this agreement will boost bilateral trade – now worth about $3.5 billion – back to levels seen before the financial crisis of 2009.
http://dailyreckoning.com/the-surprising-beneficiary-of-chinas-global-land-grab/
Rudyard Griffiths needs to find a new tie…
Also see: http://blogs.wsj.com/source/2010/06/15/in-response-to-the-ecri-us-still-looks-vulnerable-to-downturn/
“By the way, the Dow Jones ESI suggests the U.S. economy has plateaued during the past six months at broadly the level that marks the border between recession and recovery. This suggests that once the effects of the inventory rebuild are taken out, the underlying trend for the U.S. economy is rather muted. And that it’s very vulnerable to another downturn.”
John seems to be a thoughtful dude:
John Hussman is out with his latest weekly and he discusses… the ECRI Leading Indicators of course. Everyone is talking about these numbers. He is bearish, but as I have also noted the ECRI data are not yet predicting recession.
http://www.creditwritedowns.com/2010/06/hussman-four-things-to-look-for-as-a-harbinger-of-recession.html
==> As for BP Oil Spill, this seems about right:
U.S. Economic Update: Impact From Katrina Big, But How Big
“The impact of a hurricane on GDP is somewhat non-intuitive. The near-term disruption cuts
real GDP in the quarter of the hurricane. The damage is limited, however, since activity
usually revives quickly after such an event and the expenditures on repair, rescue and
reconstruction are offsets. The real damage is done to net domestic product (NDP), which
nets out the actual damages as capital consumption. NDP is really a better measure of
economic welfare than GDP, but is quoted much less. Incomes will drop sharply, as rents,
profits, and entrepreneurial income is reduced by the amount of the uninsured damage. The
insured damage cuts profits of insurance companies. These impacts are in addition to the lost
output caused by companies closing down for the hurricane and its aftermath. The result will
be an even more negative saving rate in the third quarter.”
http://www2.standardandpoors.com/spf/pdf/fixedincome/09-01-05_USEconUpdate_ImpactFromKatrina.pdf
Then there are the Australians, Steve Keen and John Quiggin, who actually apply scientific method to economics and don’t believe the world evolves around the banks. But even there own Government does not listen to them. From Steve Keen’s debtwatch blog: http://www.debtdeflation.com/blogs/2010/06/13/empirical-and-theoretical-reasons-why-the-gfc-is-not-behind-us/
The key take away: “The policy rescues since that prediction came true have not addressed the fundamental cause of the crisis, which was the excessive level of private debt.”
“Conclusion: The core propositions shared by the Bezemer-Fullbrook group were that the superficially good economic performance during “The Great Moderation” was driven by a debt-financed speculative bubble, which would necessarily burst because the debt added to the economy’s servicing costs without increasing its capacity to finance those costs. At some stage, the growth of unproductive debt had to falter, and when it did a serious financial crisis would ensue as aggregate demand collapsed. The policy rescues since that prediction came true have not addressed the fundamental cause of the crisis, which was the excessive level of private debt. The deleveraging that the Group predicted has thus been slowed to some degree by government action, but the need for that deleveraging has not been removed. As Figure 13 in particular emphasizes, the scale of that potential deleveraging appears certain to exceed that experienced in the Great Depression.”
Has anyone noticed how much better BNN is than CNBC?