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.

TEc - No land of giants - Britain's manufacturing

A brief overview of Britain's relative manufacturing demise spanning three decades also accompanied by sheer financial inebriation.
As the country's industrial heartlands were being ravaged by successive factory closures, the City in London bragged about its financial prowess. As if it could on its own lastingly represent a substitute for production of tangible goods.

I never could understand how a nation of solid manufacturing credentials dating back to the 18th century seemed wilfully contented - at the highest levels except for a few disgruntled voices - with its new-found role as one of the world's financial hubs.
Not the sophistication and volume of financial services - Britain was always known for them - but its increasingly unchallenged dominance as if the rest of the economy could simply be sidelined irreversibly condemned to decline.
After all if China and other low cost producers would happily become manufacturing powerhouses why not surrender without a fight to overwhelming evidence of economic sense(?).
Most of those who made decisions over the years will have thought no further than immediate profit, cost and scale while politicians patted on their backs unaware of far-reaching looming consequences.

The UK's economy's weakness is now fully exposed.
Facing an appalling trade deficit and insufficient yearly revenue from the mighty Services the country's current account balance threatens to remain permanently in the red. That means seeking external finance to fill the gap adding to the already massive public and private debt pile.

How short-sighted it was not to have sought the commitment from Britain's top businesses to continue to mass-produce at home first and foremost.
If the economic model has not not fundamentally changed from the 80's - consumption of durables is still key - will it ever be less than relevant where goods are actually made?

Giant or no giant companies the UK needs to reinvent itself tracing back to its industrial roots what truly put Great before Britain.
Rebalancing the UK economy is the only way to address structural imbalances reflected in the macro facts and figures that have now become ingrained in the British set-up.

It takes time, investment, policy and a vision for the country in the years ahead.

TEc - Latitude - North and South in the EU

The charts do back the text and deliver a quick snapshot of the two groups should countries be so lumped into each group.
It is questionable if this should be done as individual assessments clearly provide widely disparate initial and final standpoints.

Nonetheless, assuming there is financial, economic, cultural and climatic parenthood between countries as grouped then their performance is only a reflection of what was known all along. Right from the Euro's inception to this day. Only made worse.
Still, can an eminently industrial economy as Italy's - a longtime member of the G7 - be bagged with Greece?

That said, there is and there has always been a North-South divide of sorts in Europe. There is one worldwide too as indeed within most countries even.
The creation of the single currency was about achieving gradual economic convergence among diverse participating nations. Over a long timespan certainly.

On balance it may now be said that the opposite came true.
The most disturbing chart of all is on industrial production - wealth-driver, showing a 15% drop in the South compared to a near 10% rise in the North over 10 years.

If the Euro is to succeed and survive through another decade countries north and south of the divide have to strive harder for sound economic growth.

TEc - Dance of the giants - USA & China

The theater may be South-East Asia, the body of water the South China Sea.
The hard evidence however is that America is increasingly turning its attention to the Asia-Pacific region. Rightly so.
The reasons are plain for everyone to grasp ranging from economic interdependence between the US and China to the net worth of each of the countries brimming with self-confidence and robust economic growth.
On the downside, self-inflicted relative irrelevance is increasingly growing out from Europe now compounded and fully absorbed by the Euro crisis. Complex as it is, Eurozone troubles underpin a general malaise felt across Europe only just sparing a few nations.
These have buckled multiple trends witnessed in most countries and could indicate that Europe is not irreversibly past its prime.

But for now positive action is taking place in South Asia, South-East Asia and Asia-Pacific, Central and South America, Africa and the Middle-East.
America's leadership has long sensed that.

It is highly significant that the US should try to reassure traditional friends in the Asia-Pacific region ahead of a fast emerging China.
China for its part - judging by some of its most outspoken mouthpieces - may sound bullish beyond what might reasonably be expected of a rising major country.
A country that has long yearned to re-take its rightful place in the world.

In this game of power and influence both the US and China will only do so much.
Most individual countries in the region continue to boom and will, for the better part, seek to accommodate both giants furthering their own national interest first and foremost.

Dance they may - China and the US - but the tunes will have to cater for local listening tastes - from Taiwan to Australia - too.

TEc - Mapping migration - China's and India's diasporas

If anything these figures tell us that the world's two most populous nations have comparatively small diasporas.
Migration from these two potentially major points of origin has taken place in waves that match specific historical contexts.

Latter outflows have seen Indians flock to the Middle East in relatively large numbers mainly as temporary economic migration. This is totally unlike longtime settlers full-fledged citizens of ethnic Indian origin in places as far apart as Mauritius, South Africa or Trinidad and Tobago to mention but a few. The same goes to citizens of Chinese origin scattered around every country in South-East Asia.

Can many among these many millions appropriately be referred to as part of the diaspora?