If the Governor of the Bank of England saying the debt crisis in the Eurozone will cause damage to governments and is evident of systemic crisis is not enough, then perhaps the alarm needs to be louder even though it needn't be. Mervyn King as he is known said European governments have a solvency problem per the Wall Street Journal. If Eurozone governments decide to go all in via fiscal and political union, the strength of Germany will calm the fear that has been causing bond investors to charge higher yields for increasingly downgraded government debts, but will that happen? and how soon?
Many market observers and economists stress the key distinction in the current crisis is between monetary and fiscal decision making. Moreover, the first of these addresses funding and the latter is more a function of operational efficiency. Liquidity from bond purchases, and interest rate adjustments are monetary policy decision that affect how much money is available to financial systems. Moreover, the problem according to Mr. King isn't credit limit as much as the excessive use and abuse of that credit limit for the purpose of running governments ineffectively.
On other side of the pond things are better, but not swimmingly so. National Public Radio surveyed economists only to discover U.S. economic growth is anemic. This is somewhat echoed by a Bloomberg report on its own survey of economists. Even slow economic growth is better than none, however with many Eurozone sovereigns entering recession, and slowdowns in China and India underway is the U.S. economic engine enough to even tow its own weight in the near future. In other words, exports, industrial commodity demand, and investment could slow to the point where the international revenue many U.S. corporations rely on to maintain profit margins could also decline.
• Reuters: Retailers report better than expected November sales
• Fed: Price increases and hiring subdued, pickup in consumer spending
• DOL: 402,000jobless claims were filed the week ending 11/26/2011
• Reuters: Factories around the world are 'stalling'
• BBC: Chinese manufacturing index fell to a 32 month low
• WSJ: Bank of England governor sounds alarm on systemic crisis
• NPR: Economic growth not strong enough to lower unemployment
:.
0 comments:
Post a Comment