US economic growth hits its lowest level in 3 years

The U.S. economy turned in the weakest performance in three years in the January-March quarter as consumers sharply slowed their spending. The result repeats a pattern that has characterized the recovery: lackluster beginnings to the year.

The gross domestic product, the total output of goods and services, grew by just 0.7 percent in the first quarter following a gain of 2.1 percent in the fourth quarter, the Commerce Department reported Friday
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The slowdown primarily reflected slower consumer spending, which grew by just 0.3 percent after a 3.5 percent gain in the fourth quarter. It was the poorest showing in more than seven years. Analysts blame in part the unusually warm winter, which meant less spending on utility bills.

Economists believe the slowdown will be temporary. They forecast GDP growth will rebound to 3 percent or better in the current quarter.

Averaging the two quarters, they forecast growth of around 2 pecent.

Read more: US economic growth hits its lowest level in 3 years

EU: The End Of German Hegemony – Really? - by Francesco Saraceno

True, Germany’s growth is slowing down. These are the risks of an export-led growth model: countries are not masters of their own fate. Germany stayed clear from the peripheral countries’ crisis (that it contributed to create) by turning to the US and to emerging economies as markets for its exports.

But now that these countries are also having problems the limits of jumping on other countries’ shoulders to grow become evident. I am surprised by Gros’ surprise, as this was evident from the very beginning.

But here I do not want to reiterate my criticisms of the export-led model, starting from the fallacy of composition. Instead, I would like to challenge Gros’ argument that Germany’s influence is waning. I would say on the contrary that the Germanification of the eurozone is almost complete.

I took a few macroeconomic variables and contrasted Germany with the other 11 EMU members. Let’s start with (missing) domestic demand, a defining characteristic of the export-led growth model:

Read more: The End Of German Hegemony - Really?

Ecology, Ethics, Anarchism seen through the eyes of Noam Chomsky - by Javier Sethness

There can be little doubt about the centrality and severity of the environmental crisis in the present day. Driven by the mindless "grow-or-die" imperative of capitalism, humanity's destruction of the biosphere has reached and even surpassed various critical thresholds, whether in terms of carbon emissions, biodiversity loss, ocean acidification, freshwater depletion, or chemical pollution. Extreme weather events can be seen pummeling the globe, from the Philippines - devastated by Typhoon Haiyan in November of last year - to California, which is presently suffering from the worst drought in centuries.

As Nafeez Ahmed has shown, a recently published study funded in part by NASA warns of impending civilizational collapse without radical changes to address social inequality and overconsumption. Truthout's own Dahr Jamail has written a number of critical pieces lately that have documented the profundity of the current trajectory toward anthropogenic climate disruption (ACD) and global ecocide: In a telling metaphor, he likens the increasingly mad weather patterns brought about by ACD to an electrocardiogram of a "heart in defibrillation."

Rather than conclude that such distressing trends follow intrinsically from an "aggressive" and "sociopathic" human nature, reasonable observers should likely associate the outgrowth of these tendencies with the dominance of the capitalist system, for, as Oxfam noted in a January 2014 report, the richest 85 individuals in the world possess as much wealth as a whole half of humanity - the 3.5 billion poorest people - while just 90 corporations have been responsible for a full two-thirds of the carbon emissions generated since the onset of industrialism.

As these staggering statistics show, then, the ecological and climatic crises correspond to the extreme concentration of power and wealth produced by capitalism and upheld by the world's governments. As a counter-move to these realities, the political philosophy of anarchism - which opposes the rule of both state and capital - may hold a great deal of promise for ameliorating and perhaps even overturning these trends toward destruction. Apropos, I had the great good fortune recently to interview Professor Noam Chomsky, renowned anarcho-syndicalist, to discuss the question of ecological crisis and anarchism as a remedy. Click on the link below for a transcript of our conversation.

Read more: Noam Chomsky: Ecology, Ethics, Anarchism

Eurozone recovery still slow, but Germany and France doing better than expected

Europe's overall economy may be weak, but eurozone growth continues.

Indeed it was slightly stronger-than-expected in the bloc’s two biggest economies – Germany and France – in the final three months of last year.

Analysts said the growth was mainly driven by exports and investment.
German GDP expanded 0.4 percent from the previous quarter, France’s by 0.3 percent and Italy’s by 0.1 percent

The figures, from Eurostat, the EU’s statistics office, show 0.3 percent growth region-wide compared to the previous quarter.

Upwardly revised third quarter numbers meant France managed to avoid slipping back into recession and had growth of 0.3 percent for the whole of last year.

French company and public investment rose and household spending recovered. But the finance minister said faster growth was needed to create more jobs with unemployment at nearly 11 percent.

Italy, which is once again in political turmoil, dragged itself back to growth for the first time since mid-2011.

But the final quarter’s 0.1 percent expansion was not enough to keep GDP from contracting by 1.9 percent over the whole of 2013.

One positive sign is that – significantly – for the first time in almost three years, all of the six largest eurozone economies did manage quarterly expansions.

Read more: Eurozone recovery still slow, but Germany and France doing better than expected | euronews, economy

France: Economic crisis: can the Socialists stop the fire?

 It was a sacred cow, the holy grail. France's budget deficit would not, repeat not, exceed 3% of its GDP. It was etched in stone; the Socialist government had taken drastic measures to cut the deficit down to that magic number.

But the financial markets, the IMF, the EU, neighbouring countries and probably the average French person knew that this was mission impossible due to sluggish growth. This week, the government finally admitted the sad truth.

Read more: Economic crisis: can the Socialists stop the fire? - FRANCE 24

Consumerism has gone on steroids - by RM

Among the items which received major coverage in the press recently was the launching of the new Apple iPhone 5.  There was an incredible frenzy among large numbers of people around the world to be the first to get this upgraded Apple iPhone . We saw people sleeping in front of stores just to be the first in line to be able to buy this new gadget. How crazy can you get?

The public seems to have grown immune to these sorts of scenes but in reality this iPhone madness was another typical example of consumerism on steroids. 

Even US tourists visiting Europe from America have been overheard, when discussing their European holidays with friends at home, that their major gripe was that malls in Europe were not up to US standards based on the abundance of goods and low prices.  

Some people have become so addicted to shopping that they become irritable if they don't go to a store on a daily basis. 

How have we become so addicted to consumerism? Maybe the answer lies with the news and communications industry. For if consumerism is the bullet in our demise, then undoubtedly the media is the best weapon to get the bullet to its target.

Indeed the media for some time now has become on of the most powerful tools coming to us in many different forms, including the Internet, TV, Radio, Press. It literally goes with us now everywhere we go. Consequently it has become a bigger than life influence on what we think, do and what we buy. 

What makes it even more complex and obviously dangerous is that the media at large is not independent anymore but controlled by large corporations. They mainly look at their bottom-line and not the moral consequences of their reporting anymore.

At one time, the home at least had a natural defense to protect children from this media guided onslaught of consumerism ....it was called parents. They at least had some kind of control over the avalanche of commercialism. As parents they had the authority to decide what their kids watched, ate and did while living under their roof. 

Unfortunately, with the ever increasing numbers of divorced and dysfunctional families, single parent households, working parents and "new generation" parents who believe that giving in to everything their kids want will make them happy, that safeguard has just about become extinct.

Consumerism has also created havoc with individualism and privacy. Facebook and a variety of other social media services and search engines, who in their corporate statements pride themselves to respect your personal privacy, actually make it technically very difficult for you to control what becomes public knowledge or not.

Case in point was the birthday party of a teenager in the Netherlands who did not set her privacy settings properly on Facebook. What had been planned as a small birthday party for friends and family became a nightmare turning the girl's birthday party into a "free for all" battle between some 4000 drunk teenagers, hooligans and the local police.

Consumerism also has a hypnotic effect on your life. Even though you might be thinking – “Just because it’s on TV or in the latest news report doesn’t mean I am forced to go and buy it”, in practice that is usually not the way it works out.

The process basically works like Chinese torture - "drip - drip" - a constant bombardment of images about wealth, material possessions, body images, etc., and before you know it a person slowly gets brain-washed to the point of thinking, “well if everyone else has one of those, maybe I need one too.”  That is how the process works - in one paragraph.

Unfortunately and sad for us is that our consumption focused behavior will eventually be our demise. As American Pulitzer Prize-winning journalist Chris Hedges wrote, “A culture that does not grasp the vital interplay between morality and power, which mistakes management techniques for wisdom, and fails to understand that the measure of a civilization is its compassion, not its speed or ability to consume, condemns itself to death.” 

Maybe the most important issue that people need to realize is the impossibility of endless economic growth. The Ponzi-scheme economy that has been sold to us is no more real than a pie in the sky. Once that delusion is gone, we can probably begin to imagine and build a truly sustainable economy.

 

EU-Digest

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Economy: Planning for a world without economic growth

In the wake of the financial crisis, kick-starting growth has been at the forefront of political economics. Governments have leveraged massive amounts of capital to prop up their economies, hoping that expanding markets will help them overcome fiscal and social problems.

But does our faith in a growing economy blind us about its limitations?

The idea of an end to growth is not new. Thomas Malthus predicted it back in the 1790s, as did the Club of Rome during the 1970s. Their basic argument was that growth is inherently coupled to resource consumption, we live on a finite planet, and therefore our economies will have to stop growing at some point.

A few important statistics show our proximity to this limit. According to the UN Food and Agriculture Organization, agriculture accounts for 30 per cent of the Earth’s land surface area, and uses almost all available arable land. Food production uses 70 per cent of all water withdrawn from aquifers, streams, and lakes. Furthermore, global agricultural output will have to increase by 70 per cent over the next 40 years to keep up with our population, all while our heavily cultivated soil suffers up to 75 times the erosion rates of natural areas.

There may be plenty of oil to go around, but our costs for extracting it from unconventional sources is going up, leading to what Jeff Rubin calls peak prices of oil. An often quoted but admittedly shaky statistic is that a $10 increase in the price of a barrel of oil shaves about a half per cent off of Gross Domestic Product over two years. You get the picture.

We probably aren’t on the verge of a doomsday, but it is prudent policy-making to consider how our economies fit within larger natural and physical systems. As the world economy struggles to continue expanding, we should remember that growth is a means to an end, not an end in itself.

Read more: Planning for a world without economic growth | therecord

Latvia: Bank of Latvia raises this year's GDP growth forecast to 3.5%-4%

At a press conference yesterday, Bank of Latvia President Ilmars Rimsevics said that the central bank has raised Latvia's GDP growth forecast this year between 3.5 percent to four percent. This past January, the Bank of Latvia predicted that Latvia's GDP will grow 1.3 percent this year.

The central bank points out that albeit the growth of the economy will be more rapid than predicted at the beginning of the year, uncertainty and risks remain high primarily determined by the unstable situation in the European countries facing the debt crisis.

Stronger than expected external demand with the reinforced competitiveness permitted also the participants of the Latvian economy to maintain a positive outlook for the future and achieve a more rapid economic growth at the beginning of the year. With that in view, the projected GDP growth for the year overall has been raised from 1.3 percent to between 3.5 to 4 percent, which will have to be considered as relatively good development against the overall background in Europe.

Read more: Bank of Latvia raises this year's GDP growth forecast to 3.5%-4% :: The Baltic Course | Baltic States news & analytics

EU Economy: Hollande Sees Changing Winds in Europe - by William Horobin

French presidential candidate François Hollande on Friday said things are changing in Europe and there is growing support for his call for policies to boost growth.

Mr. Hollande’s comments come after European Central Bank President Mario Draghi called for a growth compact to complement the fiscal compact for greater discipline and convergence. Mr. Hollande, who is predicted to defeat incumbent Nicolas Sarkozy in a runoff on May 6, has said he would revise the Fiscal Compact that heads of state have already signed off on.

Mr. Hollande was further emboldened by European Council President Herman Van Rompuy, who said Thursday it is the right time for talks about growth to take center stage. “The lines are moving,” Mr. Hollande said on French radio RTL. “Not just the president of the European Central Bank, but also the president of the European Council has said he is ready to anticipate the council on a certain number of points to prepare possible measures for growth.”

Read more: Hollande Sees Changing Winds in Europe - The Euro Crisis - WSJ

With austerity failing, Europe turns its focus toward growth - by Jay Bryan

It's been arguably the most serious danger hanging over global financial markets for more than two years, and now there are signs that it's getting worse. Or, if we're lucky, maybe a lot better.

As if to emphasize the difficulties of slashing your way back to economic health, even Britain learned that it had fallen into a double-dip recession, joining much of continental Europe. As a non-member of the eurozone, the U.K. has its own, ultra-easy, monetary policy, but even this seems unable to offset the drag from a budget cutting government.

That's the bad news. But there's good news too, and it's probably more important.
It's that all this bad news has finally begun to convince skeptical political leaders and, maybe more important, bond-buying financial executives, that austerity isn't the best route to debt reduction.
"The tide is certainly shifting," says investment adviser Peter Berezin, managing editor of the Bank Credit Analyst.

"Markets now seem to understand that austerity damages growth. The view has shifted from a very firm focus on cutting to a focus on growth." Berezin sees this not only in the lack of a positive reaction when new austerity measures are announced, but also in comments from clients.

Note EU-Digest: Austerity which benefits only corporations and the wealthy while it makes "Joe Bloke" the tax payer pay the bill won't work. In America the Republicans and T-Party will also figure this out eventually.

For more: With austerity failing, Europe turns its focus toward grow

Britain, Netherlands call for EU to focus on growth - by Robin Emmot

Britain, the Netherlands, Italy and nine other countries called on Monday for Europe to shift its focus from tough budget cuts towards measures to create growth as the region looks headed for its second recession in three years.

Germany and France, the euro zone's leading powers, did not sign the letter addressed to top European Union officials, which appeared to challenge the German-led drive for austerity first and likely signals a desire among other EU members to show they can also set the agenda outside the Franco-German axis.

It was the second time in a month that Italian Prime Minister Mario Monti, an economist praised by German Chancellor Angela Merkel for his strong measures to handle Rome's own debt crisis, has criticized the north European approach on budgets.

For more: itain, Netherlands call for EU to focus on growth - chicagotribune.com