TEc asks - Will the Euro survive 2012 intact?

I am utterly and wholly unable to answer this question.
As it turns out the Euro's survival no longer depends on politicians' ability to convince financial markets that they are prepared to mount its defense at any cost.
In 2012 the markets will continue to push yields up - they will have plenty of opportunity to do so picking one country at a time - taking the EMU to the brink.
Which domino will eventually withstand upright drawing a neat line beyond survivability mode?

For the rest of us mere passive onlookers there remains only uncertainty on top of uncertainty.

TEc - The dating game - China's rise

Well done!
Simple and easy for any layman to understand what is going on regarding China's largely perceived rise to economic prominence.
Readers are afforded fiddling to their liking with two variables that sum up economic performance thus obtaining different overtaking year-dates.

One assumption, however, goes unmentioned but is internally concocted(!?) as a certainty: China will sooner rather than later become the world's biggest economy ending the long presidency of the United States of America.
It has lasted well over a century until China woke up from a long slumber to make the ongoing impressive dash to the top.
While common folk don't quite understand yet what the implications are/will be - they can't be blamed for that anyway - I often wonder if American leadership generally does. And if so, what action will it undertake to at least hold US ground.
Not by seeking to arrest China's inexorable growth but aiming to achieve and keep a decent second.
Or keep the number one spot for as long as decent growth in a mature market/economy may assure?

Far too many questions remain unanswered in the tectonic shifts brought about by gobalisation as has taken hold.
Maybe they will not get asked until it becomes self-evident what follows from economic decadence.

TEc - Running out of steam - Asia's ascent

The future is not predictable with accuracy yet trendlines and historical data provide useful clues.
When it is about countries as collective entities - each one being a rather complex reality on its own - fast paced development is fuelled by internal as well as external variables.
Both these remain largely favourable to fast economic growth even if slower than up to now.

Besides, Asia is not a homogeneous bloc that moves forward unhindered by what happens internally within each country and elsewhere.
It does share one important specific characteristic: emerging economies possess vast untapped potential both in demography and unfulfilled needs.
This is totally unlike countries that already reached developed status long ago such as Japan and the original Asian tigers to a lesser degree.

I would group Asian countries into three tiers: developed, middle-income developing fast and low-income developing very fast.
All together make up the world's fastest growing continent with the greatest potential to keep growing for many years to come.

It is way too soon to claim that their rise is running steamless as much as overstating that ascent in the longer run.

TEc asks - Will Britain avoid a second recession?

Sadly I have voted No knowing that chances are high a technical recession is in the offing, if only briefly.
It has been an unfolding never-ending saga in the Eurozone where prospects remain uncertain at the very least.
Britain's economic performance largely hinges on how the Euro crisis and its fallout play out over the course of 2012.

Unlike Germany's broad based industrial sector ever ready to deliver the goods to willing buyers, Britain's strengths and outreach are considerably more limited.
Financial services regardless of their size can hardly make a bigger contribution than they already made over the boom years.

The underlying question is how to get excessively debt-ridden countries - Britain included - on the path to sound economic growth.
I would hope to see some solid answers come in over 2012.

TEc - Trading places

A very significant milestone no doubt.
It may be regarded as a welcome development that suggests a better balanced world broadly understood to mean more evenly spread purchasing power across countries.

Nevertheless, it is worrisome to realise this is a combination of a positive and a negative. The positive is of course growing disposable personal incomes in emerging economies. The negative is the seemingly excessive contraction taking place in many developed economies.
While the former should be seen as a natural development in absolute and relative terms, the latter if unchecked is very disturbing indeed.
Slow or near stagnant growth is often a logical consequence of mature markets in developed nations.

More balanced global trade flows are only a reflection of current and a decade-long of economic performance worldwide. Itself a consequence of re-location, globalisation, absolute free trade, free western-market access and free capital flows.
They disguise the fact that individual countries are facing severe overall downturns and poor prospects.
Feeling the pinch much harder than others with little or no room for manoeuvre.

TEc - A comedy of Euros

I'm beginning to wonder whether there's any use left for Summits that don't deliver on fundamentals.
Or whether there is anything at all politicians can do to right wrongs especially when up against those-by-now infamous financial markets and rating agencies.

Setting aside rhetorical questions that keep nagging nevertheless, the latest Summit fell far short of expectations raised to make or break status. What next?
Pace of events will continue to be determined by the bond-market/s. Politicians have been cast to the sidelines merely reacting after the fact.
Germany's Angela Merkel is again a winner in that her long adopted step-by-step approach remains firmly in place.

We move into 2012 not knowing if the Euro can endure much longer under current assumptions and self-imposed strictures by the relevant institutions underpinning it.

If only I could spot a ray of hope besides believing (wishfully?) most leaders are fully aware of where the stakes are should the Euro fail.
Every nation in the EU - and further afield - will be a loser the difference being the size and permanence of the loss.
But also if hard-pressed financially-strapped countries fail to resume sound economic growth.

TEc - Double your income

The two charts confirm a faster pace of income growth taking place in the two demographic superpowers of the world.
The real name of the game is: catching-up.
Which is exactly what China and India aimed for and are achieving to different levels of success.
Narrowing the wide wealth gap between rich and poor nations is about economic growth rates being bearish in mature markets while remaining bullish in less developed ones over many decades.

If current trends stick a new world order is dawning.
What has been seen so far is only a foretaste.

TEc - Into the storm - Britain's economy

Britain's case is every bit as important as the Eurozone's for reasons stretching well beyond current woes affecting the latter.

The United Kingdom is one of the long-established nations of the industrialised world.
It chose to retain its own currency as well as every other tool to manage the economy sovereignly.
Evidence shows, however, that it is hardly in any better shape than most other highly indebted countries of the developed world, large or small.

Why?

Unless that single one-word question is correctly addressed there can be no proper resolution to the daunting challenges facing the UK economy.
It must also be said that this is despite financial markets still eyeing the UK with extreme favour.
How else can Britain's low borrowing costs be seen when set against its macro figures and real growth prospects?

Each country is one of a kind presenting clearly an individual track-record, present strengths and weaknesses and future prospects.
Close analysis quickly offers multiple data to back up relevant differences.

It would seem that the Chancellor of the Exchequer did not have an option other than to cut back on runaway spending. Where he failed was that overconfidence that his policies would spur growth quicker.

But how can that come about when recent past growth was owed mainly to overblown banking and financial services, excessive public and private spending adding up to those towering debts?

Like the so-called periphery the UK also embarked on a limitless spending spree. In fact the country's fiscal deficit and debt-to-GDP ratio combined or independently, is worse than most in Southern Europe, Greece the odd exception.
Furthermore, total debt - public + corporate + household - is by far among the highest, Ireland the odd exception here.

Then there is the powerful argument of growth potential, a meaningful one doubless. Used by market analysts to severely punish Southern countries but what truly will drive British growth in the future?

Having already been revised downwards through 2014 one wonders why financial markets remain so benevolent towards the UK while battering others including Germany lately.

There must be a one and only explanation: the Bank of England.
As long as the institution remains rock-solid in place as the government's lender of last resort markets and investors may stay calm almost irrespective of the debt pile's height?

George Osborne's efforts are therefore right in the sense that throwing debt on top of debt is unsustainable by definition.
It has got to stop at some point in time.
In the UK's case that point was reached years ago.
So too in most countries who overspent as nearly the only means to cause the economy to grow.

A very difficult balancing act now faces governments in the US and many in Western Europe.
In the immediate reining in public finances to rational and sustainable levels is paramount.
The underlying issue much broader.
It is about industrial production and other wealth drivers that may sustain rich economies over time.

In this regard the UK is relatively ill-equipped unless more than a few embedded trendlines are quickly reversed.