Posted: September 19, 2016 Filed under: Asia, China, Economics | Tags: 2010 FIFA World Cup, Asia, Bank for International Settlements, China, Gross domestic product, Hyman Minsky, Minsky moment, Purchasing power parity, Steve Keen, Wall Street
China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’.
A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.
The Bank for International Settlements warned in its quarterly report that China’s “credit to GDP gap” has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia’s speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.
Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring. The credit to GDP gap measures deviations from normal patterns within any one country and therefore strips out cultural differences.
It is based on work the US economist Hyman Minsky and has proved to be the best single gauge of banking risk, although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line.
China’s total credit reached 255pc of GDP at the end of last year, a jump of 107 percentage points over eight years. This is an extremely high level for a developing economy and is still rising fast.
Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control. Corporate debt alone has reached 171pc of GDP, and it is this that is keeping global regulators awake at night. Read the rest of this entry »
Posted: September 15, 2015 Filed under: Economics, Politics | Tags: Bernie Sanders, Democratic Party (United States), Economic growth, Government spending, Great Society, Gross domestic product, Marx, Marxism, Military parade, New Deal, New Hampshire, The Wall Street Journal
WASHINGTON— Laura Meckler writes: Sen. Bernie Sanders, whose liberal call to action has propelled his long-shot presidential campaign, is proposing an array of new programs that would amount to the largest peacetime expansion of government in modern American history.
“Sen. Sanders’s agenda does cost money. If you look at the problems that are out there, it’s very reasonable.”
— Warren Gunnels, Sanders’s policy director
In all, he backs at least $18 trillion in new spending over a decade, according to a tally by The Wall Street Journal, a sum that alarms conservatives and gives even many Democrats pause. Mr. Sanders sees the money as going to essential government services at a time of increasing strain on the middle class.
[Read the full text here, at WSJ]
His agenda includes an estimated $15 trillion for a government-run health-care program that covers every American, plus large sums to rebuild roads and bridges, expand Social Security and make tuition free at public colleges.
To pay for it, Mr. Sanders, a Vermont independent running for the Democratic nomination, has so far detailed tax increases that could bring in as much as $6.5 trillion over 10 years, according to his staff.
“One of the demands of my campaign is that we think big and not small.”
— Bernie Sanders
A campaign aide said additional tax proposals would be offered to offset the cost of some, and possibly all, of his health program. A Democratic proposal for such a “single-payer” health plan, now in Congress, would be funded in part through a new payroll tax on employers and workers, with the trade-off being that employers would no longer have to pay for or arrange their workers’ insurance.
“The Sanders program amounts to increasing total federal spending by about one-third—to a projected $68 trillion or so over 10 years.”
Mr. Sanders declined a request for an interview. His campaign referred questions to Warren Gunnels, his policy director, who said the programs would address an array of problems. “Sen. Sanders’s agenda does cost money,” he said. “If you look at the problems that are out there, it’s very reasonable.”
Calling himself a democratic socialist, Mr. Sanders has long stood to the left of the Democratic Party, and at first he was dismissed as little more than a liberal gadfly to the party’s front-runner, Hillary Clinton. But he is ahead of or tied with the former secretary of state in the early-voting states of Iowa and New Hampshire, and he has gained in national polling. He stands as her most serious challenger for the Democratic nomination.
“By way of comparison, the 2009 economic stimulus program was estimated at $787 billion when it passed Congress, and President George W. Bush’s 2001 tax cuts were estimated to cost the federal treasury $1.35 trillion over 10 years.”
Mr. Sanders has filled arenas with thousands of supporters, where he thunders an unabashedly liberal agenda to tackle pervasive economic inequality through more government services, higher taxes on the wealthy and new constraints on banks and corporations. Read the rest of this entry »
Posted: August 24, 2015 Filed under: Asia, China, Economics, Global, Humor | Tags: Beijing, China, CSI 300 Index, Goldman Sachs, Gross domestic product, Nasdaq, Parody, Pump and dump, satire, Shanghai, SSE Composite Index, Stockmarkets, SZSE Component Index
China’s stock market, a crude knockoff of Western versions, was practically slapped together overnight and featured countless obvious structural weak points.
“Sure, it looked fine from the outside, but anybody who saw it up close knew that it was of such poor quality that it wasn’t built to last.”
SHANGHAI—Proving to be just as flimsy and precarious as many observers had previously warned, the Chinese-made Shanghai Composite index completely collapsed Monday, sources confirmed. Read the rest of this entry »
Posted: August 1, 2015 Filed under: Economics | Tags: Consumer spending, Economic expansion, Economic growth, Economy of the United States, Federal Reserve System, Great Recession, Gross domestic product, International trade, United States Department of Commerce, World War II
Since the recession ended in June 2009, the economy has advanced at a 2.2% annual pace through the end of last year. That’s more than a half-percentage point worse than the next-weakest expansion of the past 70 years, the one from 2001 through 2007.
Eric Morath reports: The economic expansion—already the worst on record since World War II—is weaker than previously thought, according to newly revised data.
From 2012 through 2014, the economy grew at an all-too-familiar rate of 2% annually, according to three years of revised figures the Commerce Department released Thursday. That’s a 0.3 percentage point downgrade from prior estimates.
The revisions were released concurrently with the government’s first estimate of second-quarter output.
“While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.”
Since the recession ended in June 2009, the economy has advanced at a 2.2% annual pace through the end of last year. That’s more than a half-percentage point worse than the next-weakest expansion of the past 70 years, the one from 2001 through 2007. While there have been highs and lows in individual quarters, overall the economy has failed to break out of its roughly 2% pattern for six years.
The latest revision, however, did significantly upgrade what was seen as a historically wretched winter of 2014.
The output reading for the first quarter of last year was recast to a 0.9% contraction instead of a 2.1% annualized drop. The prior figure represented the worst contraction on record outside of a recession. The new number isn’t even the worst quarterly contraction of the expansion. GDP declined at a 1.5% annual pace in the first quarter of 2011. Read the rest of this entry »
Posted: April 11, 2015 Filed under: Crime & Corruption, Law & Justice, Politics, Reading Room, Think Tank | Tags: Barack Obama, Columbia Journalism Review, corruption, End the IRS Before It Ends Us, Gross domestic product, Grover Norquist, IRS, Lois Lerner, Los Angeles, Los Angeles Times, Robert W. Merry, Tea Party, The New York Times
Robert W. Merry reviews Grover Norquist’s new book
Robert W. Merry
writes: Among the more enjoyable spectacles of Washington in recent years has been watching Grover Norquist eluding once again a contingent of media foxhounds in full bray, yelping and jumping at the bottom of a tree in which, they are convinced, they have finally trapped the prominent anti-tax guru. One such episode took place in November 2012, shortly after President Obama’s reelection—and at a time when official Washington faced a choice between a grand fiscal compromise and the austere budget cuts that would kick in automatically under what was known as “sequestration.”
Congress would never allow sequestration to take effect, according to the media wisdom of the day, and hence Republicans would have to accept tax increases as part of the alternative fiscal bargain. That would mean the GOP would have to repudiate the famous Tax Pledge devised by Norquist and signed by nearly every congressional Republican. That, in turn, would destroy the force and power of that nettlesome Tax Pledge—and dislodge Norquist from his prominent place as Horatio at the bridge of tax policy.
[Order Grover Norquist’s book “End the IRS Before It Ends Us: How to Restore a Low Tax, High Growth, Wealthy America“, Center Street, 352 pp., $20.25 at Amazon.com]
This particular episode took place around the luncheon table of the Center for the National Interest (publisher of this website and its allied magazine), and the media hounds went after Norquist with the glee of those who know they are about to witness a political comeuppance of serious magnitude. Through it all, the imperturbable Norquist confidently and quietly held his ground—never ruffled, never riled, never lacking in magnanimity, seemingly sure of his aces. “This isn’t my first rodeo,” he said, and laid out a lucid political explanation for why his Pledge would hold, even in the face of such tectonic pressures.
[Read the full text of Robert W. Merry‘s review here at The National Interest]
The next day, the Los Angeles Times offered an analysis entitled, “Grover Norquist the has-been.” It proclaimed that “even he can’t ignore the signs that his hold is slipping.” The Washington Post’s Dana Milbank, after quoting Norquist’s insistence that congressional Republicans would adhere to their anti-tax heritage, even in the face of the looming sequestration decision, wrote with a smirk, “Also, the dog ate Norquist’s homework.” He added that Norquist’s confidence on the matter suggested he “had been on a long trip in a remote location.” The New York Times, in a front-page feature, suggested Norquist “finds himself in a tricky spot.”
What happened next? The sequestration deadline came and went, no grand fiscal compromise emerged, the austere spending cuts went into effect, and Norquist’s famous Pledge remained intact, as did the political standing and influence of Norquist himself. Dana Milbank never got around to revealing to his readers his own remote location whenthe dog was eating his prediction of Norquist’s political demise. Truly, Norquist is a Washington figure to be reckoned with.
Now he bundles up his anti-tax sentiments and political assessments into a sprightly volume entitled: End the IRS Before It Ends Us: How to Restore a Low Tax, High Growth, Wealthy America. It’s a book of many parts: primer on America’s tax history and growth in government; polemical expose of liberal legerdemain on the issue; policy recommendations for smaller government, strong economic growth and a streamlined tax system; and paean to the energy and efficiency of unfettered capitalism. He even provides an amusing narrative of the earnest efforts of his adversaries to obliterate his famous Pledge, all to no avail.
The reason they can’t obliterate it, writes Norquist, is that the American people are on to the ominous consequences of inexorable governmental expansion and fiscal incontinence. Currently, U.S. governmental spending—federal, state and local—amounts to 34 percent of the national economy, while taxes consume about 30 percent of annual GDP. And what’s going to happen to tax rates and the governmental share of GDP, he asks, when it comes time to pay down the $17 trillion in federal debt (nearly $8 trillion of it added on Obama’s watch) or the $123 trillion in “unfunded liabilities” accumulated through years of irresponsible government spending?
All this has generated civic angers that in turn spawned the Tea Party phenomenon of the early Obama years—the country’s first mass movement focused primarily on governmental spending. During the week of April 15, 2009, Americans gathered across the country in more than 600—perhaps as many as a thousand—anti-spending rallies with up to a million participants. As Norquist puts it, “A wall of opposition to government spending rose up.” At the next election, Republicans campaigning against government spending and Obama’s stimulus legislation captured the House by gaining sixty-three seats in that chamber; they also picked up a net gain of six Senate seats.
Two years later, though, the Tea Party movement seemed to have petered out. Republicans failed to oust Obama from the White House or to capture the four Senate seats needed for control of that chamber. What happened?
According to Norquist, the answer is simple. “The Tea Party didn’t fall down the stairs. It was pushed.” Read the rest of this entry »
Posted: February 26, 2015 Filed under: Economics, Education, History, Think Tank | Tags: A Time for Choosing, Antibiotic resistance, Barack Obama, Bernie Sanders, Bill Clinton, Conservatism, Conservatism in the United States, Gross domestic product, Middle class, Pethokoukis, Reaganomics, Republican Party (United States), Ronald Reagan, Scott Johnson, United States
Yes, Reaganomics Needs a 21st Century Update
“The GOP is debating whether Reaganomics needs an update” is a must-read piece by Washington Post reporter Jim Tankersley. One side answers the “What would Reagan do?” question by offering a nostalgic return to the 1980s Reagan agenda. Another prefers to apply the Reagan principles — a dynamic private sector, strong families and neighborhoods, upward mobility, work — to modern economic reality with different conservative policy results. Tankersley:
Leading Republicans are clashing over a signature issue the party has treated as gospel for nearly 40 years: the idea that sharply lower taxes and smaller government are enough by themselves to drive a more prosperous middle class — and win national elections. That simple philosophy has been the foundation of every GOP platform since the days of Ronald Reagan. Now, some of the party’s presidential hopefuls — along with some top conservative economists and strategists — are sending strong signals that they believe today’s beleaguered workers need more targeted help, even if growth speeds up.
For some context, here are a few then-and-now stats:
1.) When Reagan was elected president in 1980, the top income tax rate was 70%. Today, the top income tax rate is 40%.
2.) When Reagan was elected, the top 1% paid about a fifth of federal income taxes. Today it’s about a third.
3.) When Reagan was elected, the bottom 90% paid just over half of all federal income taxes. Today it’s around 30% with 40% of households paying no federal income taxes.
5.) When Reagan was elected, 8% of national income went to the top 1%. Today, it’s nearly 20%.
6.) When Reagan was elected, inflation had averaged nearly 9% over the previous eight years. Today, inflation is less than 2% and has averaged around 2% the past 15 years.
7.) When Reagan was elected, US publicly held debt was 26% of GDP. Today, it’s 74% of GDP with a whole lot of entitlement spending quickly headed our way.
8.) When Reagan was elected, more than 19 million Americans worked in manufacturing. Today, just under 12 million Americans work in manufacturing.
9.) When Reagan was elected, health care spending was 10% of GDP. Today, it’s 17% of GDP.
10.) When Reagan was elected, China’s GDP, in nominal terms, was 3% of America’s. Today, China’s GDP is over half of America’s and about the same based on purchasing power.
Let me also add (a) there is good reason to believe that faster GDP growth is not lifting all boats, (b) upward mobility is stagnant, (c) slowing labor force growth and productivity suggest it will be harder to generate fast growth in the future than in the past, (d) automation has taken a toll on middle-class income and jobs, (e) labor force participation by high school-only graduates has fallen by 10 percentage points over the past 25 years, and (f) inflation-adjusted market income for the top 1% has risen by 174% since 1979 vs. 16% for the bottom 80%. Read the rest of this entry »
Posted: February 12, 2015 Filed under: Economics, U.S. News, White House | Tags: Barack Obama, Congressional Budget Office, Debt-to-GDP ratio, Freddie Mac, Government budget balance, Government debt, Government spending, Gross domestic product, United States public debt
WASHINGTON (AP) — The federal government ran a bigger deficit in January, pushing the imbalance so far this budget year up 6.2 percent from the same period a year ago.
The Treasury Department said Wednesday the deficit for January stood at $17.5 billion compared to $10.3 billion a year ago. For the first four months of the budget year that began in October, the deficit widened to $194.2 billion from $182.8 billion during the same period last year.
“President Barack Obama unveiled last week his new budget proposal, which projects the 2015 deficit to rise to $583 billion, sharply higher than the CBO’s latest estimate.”
The budget deficit has gradually narrowed since 2012, which was the fourth straight year in which it topped the $1 trillion mark. The improvement reflects the country’s economic recovery from recession. The government is seeing higher tax revenues as people go back to work and smaller payments for safety-net programs such as unemployment assistance. It also represents efforts by Congress to control deficits through higher taxes and across-the-board spending cuts.
Last year’s deficit benefited from a $24 billion special payment Freddie Mac made for the support it received during the financial crisis. The Congressional Budget Office forecasts a deficit of $468 billion for the full 2015 budget year, 3.1 percent lower than in 2014.
“Obama’s new budget is asking Congress for authorization to spend $4 trillion next year and projects a 2016 deficit of $474 billion. The president’s budget proposal will set off months of wrangling in Congress.”
For the current budget year, government revenues total $1.05 trillion, an increase of 8.7 percent from the same period a year ago. Government spending totals $1.24 trillion, up 8.3 percent over last year. Read the rest of this entry »
Posted: December 4, 2014 Filed under: China, Economics, Global | Tags: China, CNN, Economy of the United States, G-20 major economies, Gross domestic product, International Monetary Fund, Organisation for Economic Co-operation and Development, United States, World economy
Brett Arends reports:
…There’s no easy way to say this, so I’ll just say it: We’re no longer No. 1. Today, we’re No. 2. Yes, it’s official. The Chinese economy just overtook the United States economy to become the largest in the world. For the first time since Ulysses S. Grant was president, America is not the leading economic power on the planet.
It just happened — and almost nobody noticed.
The International Monetary Fund recently released the latest numbers for the world economy. And when you measure national economic output in “real” terms of goods and services, China will this year produce $17.6 trillion — compared with $17.4 trillion for the U.S.A.
“Make no mistake. This is a geopolitical earthquake with a high reading on the Richter scale.”
As recently as 2000, we produced nearly three times as much as the Chinese.
To put the numbers slightly differently, China now accounts for 16.5% of the global economy when measured in real purchasing-power terms, compared with 16.3% for the U.S.
[Also see: For the first time since Ulysses S. Grant was president, USA not leading economic power on planet… AMERCA’S BIRTH RATE AT ALL-TIME LOW…]
This latest economic earthquake follows the development last year when China surpassed the U.S. for the first time in terms of global trade. Read the rest of this entry »
Posted: August 27, 2014 Filed under: Economics, Global, Mediasphere | Tags: Alabama, Britain, Fraser Nelson, Gross domestic product, Mississippi, Spectator, United Kingdom, United States
For the The Washington Post
, Hunter Schwarz: If Britain were to join the United States, it would be the second-poorest state, behind Alabama and ahead of Mississippi.
The ranking, determined by Fraser Nelson, an editor of The Spectator magazine, was made by dividing the gross domestic product of each state by its population, and it took into account purchasing power parity for cost of living. Several other European countries were also included in the ranking.
“No one beats up America better than Americans.”
Ranking by GDP per capita instead of just GDP means that states with mega-economies such as California, which has the top GDP in the United States (its GDP is also larger than most countries’), was knocked down to 14th place among the states when divided by its more than 38 million residents. Alaska comes in first, with a GDP of more than $59 billion divided by a population of 735,000. Read the rest of this entry »
Posted: June 25, 2014 Filed under: Economics, U.S. News | Tags: Consumer spending, Economy of the United States, Goods and services, Gross domestic product, Recession, United States Department of Commerce, Wall Street Journal, World War II
For WSJ, Jonathon House reports: Weather disruptions at home and weak demand abroad caused a contraction of rare severity in the U.S. economy in the first quarter, renewing doubts about the strength of the nation’s five-year-old recovery.
Gross domestic product, the broadest measure of goods and services produced across the economy, fell at a seasonally adjusted annual rate of 2.9% in the first quarter, the Commerce Department said in its third reading of the data Wednesday.
That was a sharp downward revision from the previous estimate that output fell at an annual rate of 1%. It also represented the fastest rate of decline since the recession, and was the largest drop recorded since the end of World War II that wasn’t part of a recession. Read the rest of this entry »
Posted: May 29, 2014 Filed under: Economics, U.S. News | Tags: Balance of trade, Commerce Department, Economic, Gross domestic product, Penny Pritzker, Recession, United States Department of Commerce, Wall Street
The US economy shifted into reverse in the first three months of 2014 shrinking by an annualized rate of 1%, official estimates have shown.
Grasping for rationalizations to explain the economic slowdown, “Ummm…unusually bad winter weather? It snowed a lot? It was rainy and windy, too”, the US Commerce Department said. (Photo: Penny Pritzker, Secretary of Commerce)
Worst economic performance since the first quarter of 2011.
It is also a big fall on the 2.6% rise in economic output in the final quarter of last year. The US Commerce Department’s first reading of gross domestic product (GDP) showed the economy grew at an annualised rate of just 0.1%.
“Severe weather, just say that. Really bad weather…”
The fall in output was blamed on an unusually cold and disruptive winter – one of the coldest in the US for 20 years – and a plunge in business investment.
“The White House said the GDP revision was subject to a number of notable influences, including the severe winter weather, which temporarily lowered growth.”
Economists estimate the weather could have cost up to 1.5 percentage points of GDP.
However, the Commerce’s Department’s report did not estimate the effect of the winter weather.
The fall was also twice as big as economists expected. Read the rest of this entry »
Posted: May 3, 2014 Filed under: Asia, China, Economics, Global, Think Tank | Tags: Asia, China, Financial Times, Gross domestic product, Lists of countries by GDP, Martin Wolf, United States, World Bank
“It is not a surprise that China’s economy is big but this is just because its population is big…”
In two essays, the FT’s chief economics commentator and Asia editor examine the significance of China’s imminent emergence as the world’s biggest economy
For FT.com, Martin Wolf and David Pilling write: This week we learned that China is about to overtake the US as the world’s largest economy. Since the latter is believed to have had the world’s largest economy since the early 1870s, this is a noteworthy moment. But it is not as noteworthy as many fear and others hope.
Start with what these calculations, derived from the World Bank’s longstanding international comparisons project, mean. This is an attempt to compare standards of living across countries. In 2011, China’s gross domestic product per head at market exchange rates was just 11 per cent of US levels. But once the low prices of many of China’s relatively non-tradeable goods and services are taken into account, this rose to a fifth of US purchasing power per head.
Nevertheless, China is still a poor country: the purchasing power of its GDP per head was 99th in the world. Since China also invests close to half its output, relative consumption per head was lower still.
China is, however, an enormous country, with a population of 1.34bn in 2011. Compared with this, even the US, with 312m, is almost a minnow. So in spite of being so much poorer, the purchasing power of aggregate Chinese GDP was 87 per cent of US levels in 2011. The purchasing power of China’s GDP has by now surely surpassed US levels.
It is possible to debate whether the newly revised numbers are right. The answer is that they are reasonable. A more important question is what they mean. What they do not mean is that China is already the world’s greatest economic power. Read the rest of this entry »
Posted: April 30, 2014 Filed under: Economics, U.S. News | Tags: Business, Economic growth, Economy of the United States, Great Recession, Gross domestic product, Job Growth, United States Department of Commerce
WASHINGTON (AP) — The U.S. economy slowed drastically in the first three months of the year as a harsh winter exacted a toll on business activity. The sharp slowdown, while worse than expected, is likely to be temporary as growth rebounds with warmer weather.
The economy’s growth slowed to a barely discernible 0.1 percent annual rate in the January-March quarter, the Commerce Department said Wednesday. That was the weakest pace since the end of 2012 and was down from a 2.6 percent growth rate in the October-December quarter.
Consumer spending grew at a 3 percent rate. But that gain was dominated by a 4.4 percent rise in spending on services, reflecting higher utility bills. Spending on goods barely rose. Also dampening growth were a drop in business investment, a rise in the trade deficit and a fall in housing construction.
The scant 0.1 percent increase in the gross domestic product, the country’s total output of goods and services, was well below the 1.1 percent rise economists had been predicting. The last time the quarterly growth rate was so slow was in the final three months of 2012, when it was also 0.1 percent. Read the rest of this entry »
Posted: April 22, 2014 Filed under: Economics, White House | Tags: Barack Obama, Congressional Budget Office, Fiscal year, Gross domestic product, List of countries by tax rates, Obama, Terence P. Jeffrey, World War II
(CNSNews.com) – Terence P. Jeffrey writes: In the budget proposal he presented to Congress last month, President Barack Obama called for what would be the highest level of sustained taxation ever imposed on the American people, according to the analysis published last week by the Congressional Budget Office.
Under Obama’s proposal, taxes would rise from 17.6 percent of Gross Domestic Product in 2014 to 19.2 percent in 2024. During the ten years from 2015 to 2024, federal taxation would average 18.7 percent GDP.
America has never been subjected to a ten-year stretch of taxation at that level.
In the twelve fiscal years preceding the Japanese attack on Pearl Harbor (1930 through 1941), federal taxation averaged 5.3 percent of GDP.
In the five fiscal years encompassing U.S. involvement in World War II (1942 through 1946), federal taxation averaged 16.1 percent of GDP.
In the fiscal years since World War II (1947 through 2013), federal taxation has averaged 17.1 percent of GDP. Read the rest of this entry »
Posted: October 7, 2013 Filed under: China, Economics, Global | Tags: China, Communist Party of China, Deng Xiaoping, Economy of the People's Republic of China, GDP, Great Depression, Gross domestic product, United States
Why the classic benchmark statistic is unsuitable to describing the world’s second-largest economy.
For over a quarter century, the one figure that dominated discussion of China’s economy was this: eight percent. Beginning in 1982, when leader Deng Xiaoping established the percentage as necessary to quadruple the size of the country’s GDP by 2000, China has seldom failed to achieve it—even in 2009, when the world was enduring the worst downturn since the Great Depression. The eight-percent figure became so entrenched that it acquired an almost Talmudic significance, causing speculation that if the economy didn’t grow by that amount, social instability would surely follow. (The fact that the number eight is considered lucky in Chinese culture only added to the mystique.)
These days are now over. China’s GDP has failed to reach the benchmark for six successive quarters, checking in at 7.5 percent for the second quarter of 2013. Though this growth is still robust by global standards, the sub-eight percent figure has raised concerns that a Chinese “slowdown” is now permanent—and will have serious consequences for the rest of the world. Read the rest of this entry »
Posted: August 31, 2013 Filed under: Mediasphere | Tags: British Raj, David Cameron, France, Gross domestic product, India, Syria, United States, White House
[Manmohan Singh photo courtesy of Shutterstock]
The world’s eyes are riveted on Syria this week, as the United States, France and perhaps a few others organize plans to punish a bloodstained government for its use of chemical weapons against its own people. It’s a story that has everything: the prospect of violence, the political agony of an embattled White House, David Cameron’s loss of grip, and perplexing questions about right and wrong. For liberal internationalists, few international laws are more important than those that ban the use of WMD against civilians; on the other hand, when the political patrons of a war criminal block action at the UN Security Council, liberal internationalists must choose between their highest values and their most cherished institution.
That’s why the Syria story is dominating the news this week, and like the rest of the world, VM has been following it closely. But another story that is getting less attention is much more important for the future of the world: the economic crisis in India represents a much more fateful moment in world politics than anything happening in Syria.
Read the rest of this entry »
Posted: August 28, 2013 Filed under: Breaking News, Economics | Tags: Developed country, Emerging markets, Gross domestic product, Hong Kong, International Monetary Fund, Singapore, South Korea, Taiwan
For the first time ever, the combined gross domestic product of emerging and developing markets, adjusted for purchasing price parity, has eclipsed the combined measure of advanced economies. Purchasing price parity—or PPP for short—adjusts for the relative cost of comparable goods in different economic markets.
According to the International Monetary Fund—the supplier of this data—emerging and developing economies will have a purchasing price parity-adjusted GDP of $42.8 trillion in 2013, while that of emerging economies will be $44.4 trillion. In other words, emerging markets will create $1.6 trillion more value in goods and services than advanced markets this year.
Read the rest of this entry »
Posted: July 20, 2013 Filed under: Mediasphere, Reading Room | Tags: Central America, Felipe Calderón, Gross domestic product, Mexican government, Mexico, Politics of Mexico, United State, Victor Davis Hanson
Mexico continues to encourage its citizens to migrate to the U.S., even though it doesn’t need to.
By Victor Davis Hanson
“If the United States were to treat Mexican nationals in the same way that Mexico treats Central American nationals, there would be humanitarian outrage.”
There are many strange elements in the current debate over illegal immigration, but none stranger than the general failure to discuss the role of Mexico.
Are millions of Mexican citizens still trying to cross the U.S. border illegally because there is dismal economic growth and a shortage of jobs in Mexico?
Not any more. In terms of the economy, Mexico has rarely done better, and the United States rarely worse.
The Mexican unemployment rate is currently below 5 percent. North of the border, it remains stuck at over 7 percent for the 53rd consecutive month of the Obama presidency. The American gross domestic product has been growing at a rate of less than 2 percent annually. In contrast, a boomingMexico almost doubled that in 2012, with its GDP growing at a robust clip of nearly 4 percent.
Is elemental hunger forcing millions of Mexicans to flee north, as it may have in the past?
Not necessarily. According to a recent United Nations study, an estimated 70 percent of Mexico’s citizens are overweight and suffer from the same health problems caused by poor diet and lack of exercise shared by those in other, more affluent Western societies.
Mexico is a severe critic of U.S. immigration policy, often damning Americans as ruthlessly insensitive for trying to close our border. The Mexican government has gone so far as to join lawsuits against individual American states to force relaxation of our border enforcement. Former Mexican president Felipe Calderón sharply criticized the United States for trying to “criminalize migration.”
Is Mexico, then, a model of immigration tolerance?
Far from it.
Until 2011, when it passed reforms, Mexico had among the most draconian immigration laws in the world. Guatemala has criticized Mexico for initiating construction of a fence along its southern border.
Mexico has zero tolerance for illegal immigrants who seek to work in Mexico, happen to break Mexican law, or go on public assistance — and zero tolerance for any citizens who aid them.
In Mexico, legal immigration is aimed at privileging new arrivals who have skill sets that will aid the Mexican economy and, according to the country’s immigration law, who have the “necessary funds for their sustenance” — while denying entry to those who are not healthy or would upset the “equilibrium of the national demographics.” Translated, this apparently means that Mexico tries to withhold legal residency from those who do not look like Mexicans or do not have the skills needed to make money.
If the United States were to treat Mexican nationals in the same way that Mexico treats Central American nationals, there would be humanitarian outrage.
In 2005, the Mexican government published a Guide for the Mexican Migrant — in comic-book form. The pictographic manual instructed the country’s own citizens on how best to cross illegally into, and stay within, the United States. Did Mexico assume that its departing citizens were both largely illiterate and unworried about violating the laws of a foreign country?
Yet Mexico counts on these expatriate poor to send back well over $20 billion in remittances annually – currently the third-largest source of foreign exchange for Mexico.
Read the rest of this entry »