economic situation is dire

[LondonLax]

So exports were up and domestic domand for imports was up. Sounds like the global economy is recovering.

[snowychap]

So exports were up and domestic domand for imports was up. Sounds like the global economy is recovering.

Though it would appear that a large proportion of these increases were oil and, without investigating the figures, I wonder how much of that was due to an increase in demand for volume as opposed to an increase in the value of the exports and imports.

[tonyh29]

Sounds like the global economy is recovering.

aye , but despite claims nobody has fixed boom and bust so prepare for another bust in a round 15 - 20 years time

[snowychap]

Here's one thing we seem to be importing - inflation

UK inflation rose unexpectedly in November, missing the government's official target for the eleventh month in a row, as rising food and clothing prices pushed up the cost of living.

The Consumer Prices Index (CPI) rose to 3.3% last month, up from 3.2% in October, defying City expectations that the rate would be unchanged. This is the CPI's highest level for six months, and shows that prices are still rising appreciably above the government's target of 2%.

The Office for National Statistics said that food and non-alcoholic drink prices were 5.5% higher than a year ago, while clothing and footwear prices rose by 2.1%, the biggest annual rise since the CPI began in 1997.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, said that soaring wheat and cotton prices had helped to fuel inflation in November. On a month-on-month basis, the CPI was 0.4% higher than in October.

The wider Retail Prices Index (RPI), which includes housing costs, also rose last month. RPI hit 4.7% in November, up from 4.5% in October.

Andrew Sentance, the "hawk" on the Bank of England's monetary policy committee, said the data proved he was right to vote for a rise in UK interest rates. He told BBC Radio Four's World at One that the Bank's credibility would be bolstered by a series of interest rate increases.

"In recent meetings I've been asking for a quarter percent rise. That should be seen as the beginning of a process of more normal rates," Sentance said.

Housholds face more inflationary pain

The data sent the pound higher against the dollar, up around 0.2 cents at $1.5875. Analysts predicted that the stronger-than-expected inflation would worry the Bank of England, and might prompt it to raise interest rates earlier than previously expected.

The Bank is mandated to keep annual inflation, as measured by the CPI, within one percentage point of 2%. Governor Mervyn King has already written four times to chancellor George Osborne this year explaining why inflation has been running above target, and economists believe he will have to compose more letters in 2011.

"Consumer price inflation looks ever more likely to reach 3.5% in the early months of 2011 and it may very well rise further still due to elevated food, commodity and energy prices as well as January's VAT hike," predicted Howard Archer, chief European & UK economist at IHS Global Insight.

The impending rise in VAT to 20% in January may also push up inflation, as there are fears retailers may use it to disguise price rises.

Alan Clarke, economist at BNP Paribas, said today's inflation data was "disappointing", as there had been signs that retailers had been discounting their wares in the run-up to Christmas.

"Next month is utility bills, the month after that is VAT, it's all one-way traffic at the moment," Clarke added.

Scott Corfe, economist at the Centre for Economics and Business Research, warned that 2011 will be a very tough year for many households, even if the UK economy keeps growing.

"Both ourselves and the Office for Budget Responsibility (OBR) foresee inflation outstripping average earnings growth next year, which would entail an erosion of household spending power," said Corfe.

"Consumers this year appear to have reduced their propensity to save to maintain their living standards, and there is limited potential for them to do the same next year," he added.

Today's inflation data has also dampened expectations that the Bank might launch new measures to stimulate the economy in 2011.

It would now appear that the hexperts is forecastin' worse to come. So, the rate of inflation to fall, then?

[Gringo]

FT"]Here’s what S&P said on Monday when it cut its outlook for US debt to ‘negative’:

* The economy of the U.S. is flexible and highly diversified, the country’s effective monetary policies have supported output growth while containing inflationary pressures, and a consistent global preference for the U.S. dollar over all other currencies gives the country unique external liquidity.

* We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.

And here’s what Dagong said back in November:

* The serious defects in the United States economic development and management model will lead to the long-term recession of its national economy, fundamentally lowering the national solvency.

* The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S. Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government’s intention of debt repayment.

* Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation. On the contrary, it is likely that an overall crisis might be triggered by the U.S. government’s policy to continuously depreciate the U.S. dollar against the will of creditors.

Dagong and S&P may disagree with the Fed’s medicine (perhaps because of the side effects for certain ‘US creditors’ – i.e. China), but they clearly share some dim views of the patient.

[The_Rev]

I never knew that the CIA had a list of every country's trade deficits:

www.cia.gov/library

Top 10:

1 China $ 272,500,000,000 2010 est.

2 Japan $ 166,500,000,000 2010 est.

3 Germany $ 162,300,000,000 2010 est.

4 Russia $ 68,850,000,000 2010 est.

5 Norway $ 60,230,000,000 2010 est.

6 Saudi Arabia $ 52,030,000,000 2010 est.

7 Switzerland $ 49,350,000,000 2010 est.

8 Netherlands $ 46,690,000,000 2010 est.

9 Singapore $ 44,080,000,000 2010 est.

10 Taiwan $ 39,000,000,000 2010 est.

Bottom 12:

180 Greece $ -17,100,000,000 2010 est.

181 Portugal $ -19,030,000,000 2010 est.

182 India $ -26,910,000,000 2010 est.

183 Australia $ -35,230,000,000 2010 est.

184 Turkey $ -38,820,000,000 2010 est.

185 Canada $ -40,210,000,000 2010 est.

186 United Kingdom $ -40,340,000,000 2010 est.

187 Brazil $ -52,730,000,000 2010 est.

188 France $ -53,290,000,000 2010 est.

189 Italy $ -61,980,000,000 2010 est.

190 Spain $ -66,740,000,000 2010 est.

191 United States $ -561,000,000,000 2010 est.

It's not a list of bank debts, its imports vs exports. I guess if you have natural resources or are good at making TVs or cars then you are quids in at the moment!

Public debt is here but I dont have time to format that one before I have to go out.

[Genie]

191 United States $ -561,000,000,000 2010 est.

:shock:

[snowychap]

Oops

The UK economy grew by 0.5% in the first three months of the year.

The Office for National Statistics' (ONS) first estimate of economic activity shows a recovery from the 0.5% contraction recorded for the last three months of 2010.

The news alleviates fears of a so-called double dip recession.

However, the Chancellor, George Osborne, who saw the figures on Tuesday, has already warned "we are not out of the woods yet".

[drat01]

Stagnation - Hmmmmmm

[Awol]

Stagnation - Hmmmmmm

Cameron made the point in PMQ's that the economy hadn't grown by more than 0.5% for the whole time Ed Miliband was in Cabinet.

Calm down dear....

[tonyh29]

Stagnation

to stop developing, growing, progressing, or advancing

grew by 0.5%

Hmmmmmmmmm

[Eames]

However, the Chancellor, George Osborne, who saw the figures on Tuesday, has already warned "we are not out of the woods yet".

Does this mean we are just in a clearing?

[LondonLax]

Following on from Rev's post above is a story from last weeks economist about what China could spend its saved up cash reserves on if it felt like it.

It is pretty staggering the amount of money they have stored up to splash out on whatever they want. Buying the whole of Manhattan island would hardly make a dent in their cash stockpile.

China's foreign reserves

Who wants to be a triple trillionaire?

Window-shopping with China’s central bank

Apr 14th 2011 | HONG KONG |

...BY THE end of last year, China's foreign-exchange reserves amounted to $2.85 trillion. Although China ran a rare trade deficit in the first quarter of this year on April 14th the country's central bank released new figures showing that its reserves at the end of March had soared above $3 trillion.

China’s central bank has a lot of money but not a lot of imagination. It keeps a big chunk of its reserves in boring American government securities. That means it can count on getting its dollars back. But it frets about how much those dollars will be worth should America succumb to inflation or depreciation.

So what else could China do with the money? Instead of the dollar, China might fancy the euro. China could buy all of the outstanding sovereign debt of Spain, Ireland, Portugal and Greece, solving the euro area’s debt crisis in a trice. And it would still have almost half of its reserves left over.

It might, alternatively, choose to abandon debt altogether and buy equity. China could gobble up Apple, Microsoft, IBM and Google for less than $1 trillion. It could also follow the lead of those sheikhs and oligarchs who like to buy English football clubs. According to Forbes magazine, the 50 most valuable sports franchises around the world were worth only $50.4 billion last year, less than 2% of China’s reserves.

Another favoured sink for the world’s riches is property. Perhaps China should buy some exclusive Manhattan addresses. Hell, why not buy all of Manhattan? The island’s taxable real estate is worth only $287 billion, according to the New York City government. The properties of Washington, DC, are valued at a piffling $232 billion. China is accustomed to being Washington’s banker. Why not become its landlord instead?

China could also allay its fears about energy, food and military security. Three trillion dollars would buy about 88% of this year’s global oil supply. It would take only $1.87 trillion (at 2009 prices) to buy all of the farmland (and farm buildings) in the continental United States. And China could theoretically buy America’s entire Department of Defence, which has assets worth only $1.9 trillion, according to its 2010 balance-sheet. Much of that figure is land, buildings and investments; the guns, tanks and other military gear are valued at only $413.7 billion.

These frivolous calculations illustrate the vast scale of China’s reserves but also the great difficulty it faces in diversifying them. Any purchase big enough to warrant China’s attention will also move the market against it. China can buy almost anything for a price—but almost nothing for today’s price.

Economist

[snowychap]

However, the Chancellor, George Osborne, who saw the figures on Tuesday, has already warned "we are not out of the woods yet".

Does this mean we are just in a clearing?

Osborne is a tw@t. Hope that answers your question.

[drat01]

Stagnation - Hmmmmmm

Cameron made the point in PMQ's that the economy hadn't grown by more than 0.5% for the whole time Ed Miliband was in Cabinet.

Calm down dear....

Cameron was his disgraceful norm at PMQ today. He was flustered and struggled when challenged.

[drat01]

Stagnation

to stop developing, growing, progressing, or advancing

grew by 0.5%

Hmmmmmmmmm

Tony even as a staunch Tory you must be struggling to spin this as growth. One step back last q and one step forward this to the same point leaves you at the same point? Unless of course you are Gideon and then point zero always changes :-)

[avfc89]

Stagnation - Hmmmmmm

Cameron made the point in PMQ's that the economy hadn't grown by more than 0.5% for the whole time Ed Miliband was in Cabinet.

Calm down dear....

Cameron was his disgraceful norm at PMQ today. He was flustered and struggled when challenged.

I have not seen or thought about David Cameron in a long time. But let me guess did his speeches today include Gordon Brown/Budget Deficit/Labour's spending?

Oh, and is he still using Nick Clegg as a meat shield?

[Ads]

It had a lot of making the inept opposition leader look inept.

[drat01]

It had a lot of making the inept opposition leader look inept.

:-) - amazing that most political commentators are stating now that Cameron totally lost it today with his sexist arrogance.

[Risso]

Stagnation

to stop developing, growing, progressing, or advancing

grew by 0.5%

Hmmmmmmmmm

Tony even as a staunch Tory you must be struggling to spin this as growth. One step back last q and one step forward this to the same point leaves you at the same point? Unless of course you are Gideon and then point zero always changes :-)

It's not huge growth, but growth it is this quarter. That's not spin, just a fact. You can arbitrarily add together verious periods if you like, but the fact is that any growth, particularly in manufacturing, has to be good news.