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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to http://pennystockpaycheck.com for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Japan’s economy shows recovery signs

Category : Business, World News

Japan’s economy, the third largest in the world, expands at its quickest pace in a year, showing signs of an economic recovery.

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HS2 rail benefits are ‘unclear’

Category : Business

The HS2 rail project has an estimated £3.3bn funding gap and the benefits for the economy are “unclear”, the National Audit Office says.

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Australia set to unveil new budget

Category : Business

Australia’s government is set to unveil its latest budget as it faces questions about its handling of the economy ahead of an election this year.

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Are you seeing signs of economic green shoots?

Category : Business

New surveys suggest the British economy is picking up

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China industrial output disappoints

Category : Business

Industrial production in China recorded a smaller-than-expected rise in April, underlining worries that the economy may be losing steam.

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Economy debate ‘counter-productive’

Category : World News

The chief economist at the Office for National Statistics criticises the public debate about whether the economy is a “smidgen up or down”.

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Sam Zell says sell

Category : Business, Stocks

Legendary investor says stock market is in state of “euphoria,” while economy is still in the dumps.

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Italy economy to shrink 1.4% in 2013

Category : World News

Italy’s economy will shrink by 1.4% this year, a sharper contraction than previously forecast, says the country’s statistics agency.

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Are the UK growth pessimists right?

Category : Business

Past five years appear to be a dress rehearsal for future: smaller economy, falling living standards, austerity and fed up voters

Since the start of the crisis five years ago, mainstream economics has been waiting for life to return to normal. Whatever ideological differences they might have, Keynesians and monetarists share a faith that all it takes is time and the right policies to bring back the good times. What unites them is the belief that the tough time the world has been going through since the summer of 2007 is an aberration.

But what if it isn’t? What if – in the memorable phrase of Tony Crosland when the wheels came off the economy in the mid-1970s – the party’s over? What if the 25% share of the vote taken by Ukip at last week’s local elections is not just a here today, gone tomorrow protest, but a sign of the political disaffection to come?

Should that prove to be the case, it will necessitate a complete re-think of political economy, since the model of the past 70 years has relied on decent levels of growth providing the resources not just to raise personal consumption levels but also to allow the expansion of welfare provision.

There are three reasons why this might be an over-gloomy assessment. The first is that growth does at last seem to be picking up, even if slowly and unevenly. In the US, the housing market is on the mend and the financial system has been largely patched up. In Britain, demand for mortgages is rising, new car sales are robust and the forward-looking business surveys are looking stronger. Consumers seem to be fed up with being miserable and have started to spend a bit more.

The second reason why the dark clouds may eventually be banished is that this is not the first time people have predicted the end of growth and been proved wrong. You don’t need to go all the way back to Malthus for an example: in the 1970s, there were plenty of doomsters who said the limits to growth had been reached.

The final reason, linked to the second, is that every now and then a burst of technological innovation has come along to revitalise the western industrial model. It happened at the end of the 19th century with a wave of innovations that included the automobile, the aeroplane and the cinema, and there are those who think what’s happening in digital, biotechnology, robotics and energy will perform the same function over the next 10-15 years.

Let’s take these points in turn. It is certainly true that western economies – the eurozone apart – are enjoying some growth. It is also true that the emergency policy actions of late 2008 and early 2009 prevented a severe recession from turning into a rerun of the 1930s. But five years on these emergency measures are still in place. Not just that, they have been augmented over time and are now permanent features of macro-economic policy. We have become hooked on stimulus and this is not a healthy sign.

An alternative history of the past 40 years goes as follows. The growth pessimists were broadly right, but what they did not anticipate is that the west would find new, ingenious and often dangerous ways of keeping the show on the road: financial de-regulation, personal debt, globalisation, exploiting the environment. There are still a few tricks policymakers can turn, such as shale gas and quantitative easing, but essentially these are just new versions of the old tricks. The game is up.

Nor, if the American economist Robert Gordon is right, can we rely on the cavalry to arrive in the form of technological change. Gordon argues that the current wave of innovations will prove less growth rich than those of a century ago.

Stephen King, the chief economist at HSBC, says in his new book, When the Money Runs Out, that we should not take progress for granted and should instead be bracing ourselves for the end of western affluence. He says the stagnation is far from temporary and will reach crisis proportions before too long.

King paints a dystopian vision of the future in which nations recoil from globalisation and become more willing to fight over resources. Populations lose their faith in governments and in money that has been debased by attempts to revive growth.

You don’t need fully to buy into this argument to see that King might be on to something. In Britain, we have a set of economic assumptions: that the economy will expand by 2% or so a year; that rising house prices will provide owner-occupiers with a nest egg; that the nation is wealthy enough to spend more on the steadily increasing cost of health, education, pensions and care for its elderly citizens.

There would need to be a radical scaling back of expectations in the event that the trend rate of growth is no longer 2 to 2.5% a year but 1%. Some of the promises we have made ourselves about the future would look extravagant, even reckless. There would be hard choices to be made between higher taxes and pared-back provision of public services. There would be a struggle to secure the fruits of what little growth there was, which those with the sharpest elbows would win. Many people would be in the position of seeing their living standards drop year after year, and would be mightily unhappy as a result.

In reality, a dress rehearsal for this sort of world has been going on for the past five years. The economy is smaller now than it was in 2008; living standards have fallen sharply; austerity has been imposed and – as the support for Ukip shows – there is a great deal of disgruntlement about.

Received political wisdom is that David Cameron and the Conservatives have the most to lose from the rise of Ukip. That’s true if Nigel Farage is merely surfing a wave of Euroscepticism, but if he’s tapping into a deeper well of disquiet the political leader with the real headache is Ed Miliband.

Why? Because social democratic parties thrive in times of abundance and wither in times of dearth. A growing economy allows parties of the left to increase investment in public spending and to redistribute resources from rich to poor. When they preside over falling living standards and cuts in social provision, they get kicked out.

Many natural Labour supporters voted for Ukip last Thursday, even though the past three years under the coalition should have made the official opposition the receptacle for protest. Labour should have done much, much better. That it didn’t boils down to two things. The opposition is still blamed for the state of the economy when the crisis broke. More significantly, perhaps, Labour needs to show that the growth pessimists are wrong and that it has a plan for remedying the UK’s deep structural problems after the next election. As yet, it has not remotely done so.

• Stephen King: When the Money Runs Out; Yale University Press

Indonesia growth hit as exports slow

Category : Business, World News

Indonesia’s economy grows at 6% in the first three months of the year, its slowest pace in more than two years, as exports slow.

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