The rich world’s economy

Not quite party time

Signs of recovery have multiplied, but the West’s economies are not yet out of danger

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As the head of the German Bundesbank said just before the holiday period "if the markets want to panic about the long term future of the EZ (Euro)- so be it" - or words to that effect.

The EZ(EU) leading governing elite's in all areas of policy and implementation are far more experienced and intelligent in managing their political economies during the post war period then their counterparts in the UK / US, as can be seen from the simple example of the way the UK / US has devalued their currencies around 70 / 80 percent over this time compared to the DM / Euro.

You always seem to view the short term speculative trading markets as the driving force over politicians and central bankers, rather than from the "Real Economy", even Greece with around a third in the "shadow economy" - so much for statistics.

Germany, in my view, will quietly lead the EZ / EU out of its current crisis over the next decade or two, in the same way as they have done for their own country, on at least 3 occasions in the post war period, and in the meantime, "The Markets" should just go to sleep and let the real economies recover in a sustainable way, in which all levels of civil society share, rather than just the 1% crony financial (speculative trading) capitalist crowd, based mainly in London and New York, that you believe should govern all things economic and financial - rubbish really - but as always - we shall see in the fullness of time.


I think the point is absolutely right. At the end of the day, the US, but particularly the EU, will need structural reforms.

In the EU,
The retirement age MUST be higher, labor laws MUST change, and Europe's inability to take advantage of immigration MUST be fixed. Otherwise you just don't have enough contributors to beneficiaries, and no amount of mucking around with the short term austerity/stimulus or currency stability/full employment debate is going to change the long-term outlook.

In the US,
the tax code MUST be updated, the provision of health care MUST be made more friendly to churn, and the public sector MUST deliver a better return on investment. Whether we spend more money on healing people/educating people or less, we need to do so in a better way than the current mess that is the status quo.

We need some RE-form, and that in the end falls on politicians not central bankers (saints preserve us).


Its a great time to short stocks, this rally is based on very little data.
US GDP headline growth was good in 2011Q4 but look under the number & over half the growth is inventory, the US will slow sharply from 2012Q2 onwards.
Some southern European countries will leave the Euro by the end of 2013, no society will except 20% plus unemplyment for long, fundamentally nothing has changed in the last 2 months.


I will be ready to celebrate only when AS WELL THE ECONOMIST, politicians, and not just central bankers, start making the right choices.

Stop your addiction to Keynes, start thinking! Sending money to unproductive systems ( ~countries now) will not make them productive. And money will remove the focus and will in many countries under fire to accomplish the necessary reforms. It's painful and sad, but the only way to make politicians act. I'm so glad with the german viewpoint, taking all the blame but saving us all in europe for going into the wrong direction. Now also a rebooted and convinced Economist, that will make my day :-)


If you continually predict the downside possibility, sometimes you will be right. But that does not mean that your predictions were accurate.


What is missing in the long run, is a new approach to social security. The old concepts of the late 19th century were a brilliant idea in the economic environment of its day. Social security was ensured by taxing the one thing that was in short supply almost all the time and could not (yet) be replaced - workforce. It would seem that a higher price of labour would put a limit on the economy, but since money ultimately comes from consumers and that is whom the money is given to, no shrinkage of the economy as a whole was the result. In fact, it encouraged investments into reducing the limitations in place, to use technology that would need fewer workers. Of course, this process is self-defeating, if it works. And it worked.

These days taxing investments, instead of subsidizing them, would not put a dent on investments. On the contrary, since there would be more money in the hands of consumers, a lot of investments would start to make sense that could formerly not be justified for lack of consumer spending. There is more than enough money to go around in the industry, investments are not being done for lack of demand. The reduction of the tax burden on wages (since labour is no longer scarce) would further serve to alleviate the problem.

It is quite likely that this analysis is wrong in some way and there are other and better ways to ensure social security (and thus security of demand by consumers), but over a century later, structural reforms are clearly in order.


Hurray for publius50 !!!

Yes, the ball is in the politics court. Supporting industries that create real productive jobs. Industries that produce local multiplier effects. This is economics 101. Sometimes simple solutions hurt.



Banking giant Barclays slashed bonus pot by 32% in 2011... but CEO Bob Diamond won't say how much HE'S getting amid rumours payout could exceed £11m We had god times, now we have rotten times but yes we are living. That is all folks. Now that Russia and China have vetoed the U.N. Security Council resolution on the violence in Syria, what does the international community intend to do next and how will the situation play out? Secretary of State Hillary Clinton said just now there's no way to know. We don't know what the endgame will be until we start the game," Clinton said at a press conference at the 2012 Munich Security Conference, just minutes before Russia and China killed the resolution put forth by Morocco and supported by the United States and several other security council members. "Asking what the end game is can't be answered until we actually start to bring about the changes that we think will be beneficial." European countries that the United States was not abandoning Europe despite the defence budget cuts in the U.S. and the American strategic pivot to Asia. He announced that a battalion sized U.S. military force would rotate to Europe as America's first concrete presence in the NATO Response Force. "Our military footprint in Europe will remain larger than in any other region in the world," he said. In the question and answer session following his remarks, Panetta said that the Pentagon was not planning to implement the defence "trigger" set to go into effect in Jan. 2013, which would mandate $600 billion in additional defence cuts over the next ten years. "Sequestration is a crazy formula," he said. "We're not paying attention to sequester. Sequester is crazy... If sequester happened, the strategy I just developed would have to be thrown out the window." And guess who pays for the shortfall if there is any? You , I . peanuts but it all adds up. I thank you Firozali A.Mulla DBA


I think the U.S economy may stabilize after Bin Laden's capture but, Japan and Europe may take longer to recover.


Many are very optimistic with regards to growth of the world economy. There are rise and fall in the world economy and here is a site that can help in keeping track of what is going


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