Nothing Has Been Solved
by Matus Posvancon July 20, 2013 August 31, 2017
The Euro crisis is definitely not solved. Greece's unemployment rate in April 2013 was 26.9% compared to 23.1% in April 2012 and 26.8% in March 2013. The number of the employed amounted to 3,636,042 people. The number of the unemployed amounted to 1,337,621 while the number of inactive people to 3,337,051. It means that 3.6 million people in Greece are working to support 4.6 million of inactive ones. And we have had another problem in the country as well. Non-performing loans have just surged to €66 billion, amounting to a whopping 29% at the end of March from a "manageable" 24.2% at the end of December. That's a ridiculous 20% increase in the total number of NPLs in three months, which was only exposed due to Troika's stress testing!
Portugal's president threw the country into disarray on Thursday calling for early elections next year. President Silva proposed a cross-party agreement to guarantee wide support for austerity measures needed for Portugal to exit its bailout next year, followed by elections. It was a surprise for Prime Minister Coelho, who thought he had overcome a cabinet crisis. The 10 Y yields on governmental bonds were automatically almost 8 %, which creates unsustainable environment to serve the country´s debt.
"France is destroying 8,000 jobs a day." This was said by Pierre Gattaz, the new leader of business federation in France. It is probably overblown, but it illustrates the situation in the country. France is being suffocated by high taxes and an over-regulated system, and rising unemployment is a direct outcome. Christophe de Margerie, head of the energy giant Total, said it very clearly: "The real problem we have in France is the state. Some 55pc of GDP is in the hands of the state, and it is not being very well run. We live in a nanny culture where people expect the state to take care of everything."
The International Monetary Fund lowered its 2013 global GDP growth forecast to 3.1% from 3.3%. According to the IMF, the US will be down to 1.7% from 1.9% and the euro area GDP will contract 0.6% in 2013, downgraded from the previous estimate of a 0.3% contraction. The revision was made for 2014 as well.
The Japanese government plans to adopt a different measure of inflation. The government plans to use so called "core-core" CPI, which excludes volatile prices of fresh food as well as energy costs. The change could result in more pressure being put on the central bank to keep flooding the market with yen as the inflation target becomes harder to achieve. Ok. So it seems to me that inflate to infinity is the government official plan now.
As I mentioned above, we have had the FOMC minutes and Ben Bernanke appearance. The FOMC minutes have shown that it is very probable that the committee is divided about the present 85 billion bond buy policy, and the final confusion came from the chairman who claimed that "Highly accommodative monetary policy for the foreseeable future is what's needed" which is a little bit contrary to the FOMC minutes. We had a resignation of one member of the committee afterwards when Elizabeth A. Duke submitted her resignation the following day, which could be a logical response of what the "other half" of the Fed thinks about present time policy. But who knows.
Can you guess whether full-time employed workers in the US outnumber the Americans who receive food assistance and/or are on disability? The simple answer is no. But do not be so fast. There are 116 million Americans with full-time jobs, including 21.9 million government workers. The number of Americans who receive some kind of social assistance is 112.5 million. So far, so good. There are only 3.5 million more Americans with full-time jobs than there are Americans who are reliant on the government. Not a very good perspective.
What will our economic future be like? Do you seek the answer? Let´s participate in our event called the Future of Money 2.0 (online stream is prepared for non-Slovak participants). More info here.
This entry was posted in Economy and tagged Ben Bernanke, economic future, F.A. Hayek Foundation, Future of Money 2.0, public finances. Bookmark the permalink.
About Matus Posvanc
Director of the Slovak F.A. Hayek Foundation.
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