Hamish McRae: Don't Write Off the US Economy
THE INDEPENDENT: China and India may be growing faster but in technical innovation there's no contest

Americans may be glum about their political situation but they are becoming less so about their economic one. So much of the reporting from and within the US has focused on the discord in Washington that the wall of sound has obliterated the signals from the economic heartland. Such signals that have come through have been largely negative and have been reported though a political prism.

It makes a good headline to write that employment has failed to respond to the increase in output and it makes a good picture to show the decaying homes on abandoned developments. Such positive stories that have been around, of which the recovery in share prices is the most obvious, have almost made matters worse, for they suggest that the few on Wall Street are again benefiting from the tax dollars of the many on Main Street.

Dig a little deeper though and you can sense that American corporate self-confidence is returning: a sense of optimism, almost of swagger, that is quite absent from the prevailing mood in Europe and the UK. Quite suddenly, after all the despair, the fears of financial meltdown have evaporated. America, or at least Business America, is back. Why?

Well part of it is what has been happening in financial markets. Markets both reflect the prevailing mood and help shape it. If the financial services industry is making money then it becomes easier for the rest of industry, "real" industry you might say, to get investment funds, think of possible acquisitions and resume planning for the future. Six months ago it was still a question of survival. Now that is past.

The dollar has helped too, not in the sense that a strongish currency is good for business but rather that it shows that, whatever the problems of the US, at least the currency is not bowed down by the concerns that have been plaguing the euro and the pound. Rationally California may be in an even bigger financial mess than Greece and at some stage pretty soon the country will have to come forward with credible plans to tackle the Federal deficit. But for the moment at least the dollar remains a safe haven and in that sense carries the message that the US is a safe haven for global savings. >>> Hamish McRae | Wednesday, March 10, 2010

US Bailout Companies Ordered to Cut Pay
TIMES ONLINE: Top executives at US companies that have not yet repaid billions of dollars of taxpayers' bailout money will be forced to take pay cuts of up to 90 per cent after a ruling by President Obama's pay czar.

The most senior 25 employees at Citigroup, Bank of America, American International Group, General Motors, Chrysler, as well as the financing arms of the two car companies, will see their basic salary fall to just 10 per cent of previous pay, with some earnings replaced with shares in the company that cannot be sold for several years.

The result of the measures will be an average remuneration reduction of 50 per cent.

The move is designed to link the personal self-interest of board members with the long-term health of the company and will be closely watched in the UK, as ministers grapple with how to limit the excesses of bonus culture at British banks. >>> Rebecca O'Connor | Thursday, October 22, 2009

Obama's White House Is Falling Down
SULTAN KNISH: In the sixth month of his presidency, Obama has turned an economic downturn into an economic disaster, taking over and trashing entire companies, and driving the nation deep into deficit spending expected to pass 10 trillion dollars.

Abroad, Obama seems to have no other mode except to continue on with his endless campaign, confusing speechmaking with diplomacy. It is natural enough that Obama, who built his entire campaign on high profile public speeches reported on by an adoring press, understands how to do nothing else but that.

While the press is still chewing over Obama's Cairo speech, this celebrity style coverage ignores the fact that Obama's endless world tour is not actually accomplishing anything. Instead his combination of ego driven photo op appearances and clueless treatment of foreign dignitaries have alienated many of America's traditional allies. Those who aren't being quietly angry at Obama, like Brown, Merkel or Netanyahu, instead think of him as as absurdly lightweight, as Sarkozy, King Abdullah or Putin do.

While his officials carry out their dirty economic deeds, Obama responds to any and every crisis as if it were a Mickey Rooney and Judy Garland musical, with a cry of, "Let's put on a show." Thus far Obama has put on "shows" across America, Europe and the Middle East. And what the adoring media coverage neglects to cover, is that Obama's shows have solved absolutely nothing. They have served only as high profile entertainment.

Neither alienating America's traditional allies, through a combination of arrogant bullying and ignorance, nor appeasing America's enemies, has yielded any actual results. Nor does it seem likely to. Islamic terrorism is not going anywhere, neither are the nuclear threats from North Korea and Iran. While Obama keeps smiling, the global situation keeps growing more grim.

At home, if Obama was elected as depression era entertainment, the charm of his smiles and his constant appearances on magazine covers appear to be wearing thin on the American public. Despite the shrill attacks on Rush Limbaugh or the Republican Enemy of the Weak-- the Democratic party of 2009, is polling a lot like the Republican party of 2008. The Democrats have suddenly become the incumbents, and the only accomplishment they can point to is lavish deficit spending, often on behalf of the very same corporations and causes they once postured against.

The European Union Parliament's swing to the right cannot be credited to Obama, though doubtlessly some European voters seeing socialist economic crisis management on display in the world's richest country decided they wanted none of it, but it is part of a general turning against federalism. And Obama's entire program is dependent on heavily entrenching federalism at the expense of individual and state's rights. Yet that is precisely his achilles heel with independent voters who are polling against more taxes and expanded government. And no amount of speeches by Obama can wish away his 18 czars or the national debt he has foisted on generation after generation of the American people. That leaves Obama with a choice between socialism and the independent voter. And thus far he has chosen socialism. >>> | Sultan Knish

New Dark Age Obamonomics! US Cities May Have to Be Bulldozed in order to Survive
THE TELEGRAPH: Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.

Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.

Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.

Most are former industrial cities in the "rust belt" of America's Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.

In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.

"The real question is not whether these cities shrink – we're all shrinking – but whether we let it happen in a destructive or sustainable way," said Mr Kildee. "Decline is a fact of life in Flint. Resisting it is like resisting gravity." >>> By Tom Leonard in Flint, Michigan | Friday, June 12, 2009

Experts Can Only Guess as We Head Into the Unknown
THE SUNDAY TIMES: American Account

“DON’T project beyond the range of the known observations” is a rule followed by careful economists. In plain English this means, for example, that we know how American consumers behave when petrol prices move between $1 and $4 a gallon, “the range of the known observations”. But we haven’t much of an idea what consumers would do if prices rose to $5 — no experience, no data to inform our forecasts. Which is why we have to be very careful when predicting the effect of the various policies that are being adopted to fight the credit crisis and recession. We simply have no experience of this combination of events.

So we have reason to worry about the galaxy of stars that Barack Obama has assembled to help him right the American economy. They are so bright, so self-confident, so accustomed to being the smartest guy or girl in the room, that doubt is not one of the emotions with which they are familiar, as was true of the bright young “quants” (mathematical economists) who designed the models used to manage the risks taken on by Lehman Brothers and AIG. Something about hubris and nemesis comes to mind. >>> Irwin Stelzer | Sunday, December 14, 2008

The Dawning of a New Dark Age – Paperback (US) Barnes & Noble >>>
The Dawning of a New Dark Age – Hardcover (US) Barnes & Noble >>>

An Optimistic Economic Viewpoint on the US Economy
THE TELEGRAPH: Like a great battleship at sea, the US industrial and export machine is slowly turning around. Within a couple of years, its big guns will be sweeping the world again, ready to silence pious talk about America's trade deficit - and to menace chunks of Europe's manufacturing base.

The fast-inflating economies of China, emerging Asia and Eastern Europe will be reminded globalisation cuts both ways. Jobs can flow from Shanghai to Los Angeles.

US exports reached a record $140bn (£66.5bn) in September, powered by Prairie grains, Texas cotton, semiconductors, chemicals, even cars. "I put the US economy up against any in the world in terms of competitiveness - that's a fact," said US Treasury Secretary Hank Paulson.

The US trade deficit has fallen to $56.5bn, down 14pc in a year. The current account deficit has slimmed from 7pc of GDP in early 2005 to 5.5pc, and is narrowing fast. Bad, but no longer catastrophic.

This is the first fruit of devaluation, enough to hobble Airbus and prompt French president Nicolas Sarkozy to warn of "economic war" on Capitol Hill last week.

French industrial output fell 1.1pc in September. It is becoming ever clearer that Europe will suffer as much from America's housing crash as America itself, and perhaps more so. This is what happened after the US dotcom crash. Flexible economies rebound faster. US will retake economic superpower crown (more) By Ambrose Evans- Pritchard

THE TELEGRAPH:
Goldman alert over emerging markets By Ambrose Evans-Pritchard

LE FIGARO:
Voyager aux Etats-Unis devient plus abordable De Bruno Askenazi

Mark Alexander

Bernanke Says US Economy to Slow Down
Photo of Ben Bernanke, the Federal Reserve chief, courtesy of the BBC
BBC: Federal Reserve chief Ben Bernanke has warned that the US economy will slow noticeably before the end of the year.

He blamed the slowdown on the credit crisis, which has made it harder for banks and individuals to borrow money.

He said that there was likely to be more "financial restraint on economic growth as credit becomes more expensive and difficult to obtain".

In the longer term, he said that the greater premium attached to risk may lead to a healthier financial system. Bernanke says US economy to slow (more)

BBC:
Global credit crunch

FINANCIAL TIMES:
Bank of England holds rates at 5.75% By Chris Giles

FINANCIAL TIMES:
Pound hits fresh high after rate decision By Peter Garnham

NEUE ZÜRCHER ZEITUNG:
US-Banken schockieren mit neuen Milliardenbelastungen: Neue Belastungen in Millardenhöhe angekündigt

LE FIGARO:
Wall Street fébrile De Perrine Créquy

Mark Alexander

Harsh, Uncomfortable Words for the White House from the Ol’ High Priest of Finance
TIMESONLINE: AMERICA’s elder statesman of finance, Alan Greenspan, has shaken the White House by declaring that the prime motive for the war in Iraq was oil.

In his long-awaited memoir, to be published tomorrow, Greenspan, a Republican whose 18-year tenure as head of the US Federal Reserve was widely admired, will also deliver a stinging critique of President George W Bush’s economic policies.

However, it is his view on the motive for the 2003 Iraq invasion that is likely to provoke the most controversy. “I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil,” he says.

Greenspan, 81, is understood to believe that Saddam Hussein posed a threat to the security of oil supplies in the Middle East.

Britain and America have always insisted the war had nothing to do with oil. Bush said the aim was to disarm Iraq of weapons of mass destruction and end Saddam’s support for terrorism. [Source: Alan Greenspan claims Iraq war was really for oil (more) » By Graham Paterson]

Fed veteran Alan Greenspan lambasts George W Bush on economy By Graham Paterson

Power, not oil, Mr Greenspan

Mark Alexander

Bush’s Abject Failure: The Economy – US Debt Woes Pull US Dollar Further Down into the Doldrums
TIMESONLINE: Sterling soared today to levels not seen since 1981 as 'risk aversion' to the dollar grew amid US housing market fears

Renewed worries about the crisis descending on the American sub-prime housing market sent the dollar tumbling to 12-year lows on the currency markets and pushed the British pound to its highest level since 1981.

Sterling leaped to $2.05, a 26-year peak, fuelled by renewed expectations of higher UK interest rates after stronger than expected inflation data emerged yesterday.

Set alongside fresh price highs charged by Britain's retailers, it reinforced predictions the Bank of England would increase interest rates to 6 per cent as early as next month. Pound hits $2.05 as dollar struck by US debt woes (more)

Mark Alexander