EU-Economy: European Commission upgrades economic forecasts - by Sam Fleming

The European Commission has sharply raised its economic forecasts for the coming two years, as an accelerating vaccination campaign helps the eurozone recover from the historic blow delivered by the pandemic.

The euro area will expand by 4.3 per cent this year and 4.4 per cent in 2022, Brussels said on Wednesday, compared with previous forecasts for 3.8 per cent growth in both years. As a result, all member states are now expected to regain their pre-crisis output levels by the end of next year, following a historic 6.6 per cent slump in 2020.

The stronger outlook was driven by the rising vaccination rates and the prospect of lockdowns easing across the region, as well as improving export demand driven by a global rebound. Brussels for the first time fully factored in the impact of the €800bn Next Generation EU economic relaunch package, which is expected to begin paying out in the second half of the year.

“The shadow of Covid-19 is beginning to lift from Europe’s economy,” said Paolo Gentiloni, the EU’s economics commissioner. “After a weak start to the year, we project strong growth in both 2021 and 2022. Unprecedented fiscal support has been — and remains — essential in helping Europe’s workers and companies to weather the storm.”

Read more at: European Commission upgrades economic forecasts | Financial Times

Net Zero Concept: Climate scientists: concept of net zero is a dangerous trap – by James Dyke, Robert Watson and Wolfgang Knorr

The US has joined the EU in committing to net-zero emissions by 2050—and the latter to 55 per cent net lower emissions by 2030. Scientists fear the ‘net’ could displace urgency.

The threats of climate change are the direct result of there being too much carbon dioxide in the atmosphere. So it follows that we must stop emitting more and even remove some of it. This idea is central to the world’s current plan to avoid catastrophe. In fact, there are many suggestions as to how to actually do this, from mass tree planting, to high tech direct air capture devices that suck out carbon dioxide from the air.

Read more at: Climate scientists: concept of net zero is a dangerous trap – James Dyke, Robert Watson and Wolfgang Knorr

EU: An economic, as well as a monetary, union? – by John Palmer

There is not much of a market just now for optimism about our economic, social, political or environmental future. In the wake of the Covid-19 pandemic, we face the worst economic crash in more than 100 years and potential climate-change disaster. But the outcome of the marathon Brussels summit heralds a strikingly encouraging new direction for the European Union.

The significance of the five-day European Council is not simply the sheer size of the €1.2 trillion stimulus to be given the EU economy but the unprecedented scale of the collective borrowing the union will undertake on world financial markets, to finance that recovery strategy. Of the €750 billion to be invested in post-pandemic economic recovery, an unprecedented €390 billion will be in grants, not repayable loans.

Read more at:
An economic, as well as a monetary, union? – John Palmer

EU: France becomes a nation of optimists

he French have become more optimistic about the future that at any time in the past eight years, a survey showed on Tuesday (2 January), belying their reputation as a nation of pessimists.

According to a Harris Interactive survey for RTL radio, 59 percent of the French were optimistic for 2018, the highest level since 2010 and 15 points higher than a trough in 2012.

Supporters of President Emmanuel Macron’s party were the most optimistic, the poll showed, while those of the far-right National Front were the most pessimistic.

“There’s probably a bit of a Macron effect,” Harris head of political polling Jean-Daniel Levy said, pointing to renewed hope about European integration, one of Macron’s policy priorities.

“There is in particular the feeling of having a presidency that holds water, with good prospects on the economic front,” he told Reuters.

Read more: France becomes a nation of optimists – EURACTIV.com

Wall Street: forget about market corrections - the party is over - "this is a meltdown for Wall Street folks"

The Dow implosion continues -364.81 / -2.21%today Wednesday January.

Year to end  a -7.31% drop. Wall Street might have been able to fool some people, but they can't fool investors all the time.

The party is over folks, at least for the time being, and nothing seems to be on the horizon to be a cause for optimism.

EU-Digest

Global Economy: Wall Street braces for big losses as global stocks sink

Investor fear resumed Thursday as Wall Street looked set for another angst-ridden trading session triggered in part by worries that major economies around the world are seeing slowing growth.

The prospect of the Ebola outbreak in West Africa spiraling out of control is also weighing heavily.
U.S. stock futures wavered several hours ahead of the market open, before moving firmly lower Thursday. Dow, S&P 500 and Nasdaq indexes are all off about 0.8% or more.

Stock markets in Asia tumbled earlier after Wall Street saw wild swings Wednesday before ending down 173 points.

Tokyo's Nikkei 225 index dived 2.3% Thursday. Hong Kong's Hang Seng index dropped 1%. China's Shanghai Composite index fell 0.7%.

European shares fared no better despite initially displaying some signs of stabilization following huge losses in the prior session.

The German DAX was down 1.7%. Spain's IBEX 35 index tanked 2%. Italy's FTSE MIB closed in on a 3% loss.

The fate of Greece was a particular concern in Europe. Investors are worried the country might need more financial support as its government borrowing rates have risen sharply in recent days. Greece's benchmark 10-year-bond yield rose 1.13 percentage points Thursday to 8.86%.

Oil prices continued to come under pressure.

U.S. crude was down over 2% to $79.91 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 6 cents to close at $81.78 on Wednesday.

Read more: Wall Street braces for big losses as global stocks sink

America's Best Days - Majority believes they are still here

Overall Americans remain pessimistic about the nation’s future.

A new Rasmussen Reports national telephone survey finds that just 34% of Likely U.S. Voters think America’s best days are still to come, although that's up from 31% in October 2013,   the lowest level of optimism in two-and-a-half years. Forty-six percent (46%) think the nation’s best days are in the past, down from a recent high of  52% last October. Twenty percent (20%) are not sure. (To see survey question wording, click here).

Read more: America's Best Days - Rasmussen Reports™

US Economy: The US Dollar Printing Presses Are Running Out of Ink - by RM

"stop the dollar printing press"

For someone to get a n immediate birdseye view as to the status of the US economy, the usdebtclock.org shows that the official US deficit of US 17 trillion dollar now breaks  down to a $753,000 debt share for each American citizen.

But is that the whole deficit picture?

When US politicians speak about the US debt they usually only refer to this 17 plus trillion US deficit.  They hardly ever mention that this is only the tip of the iceberg. For on top of that 17 trillion dollar deficit, the US also has a 17 trillion liability for social security, 22 trillion in prescription drug liability, 88 trillion in medicare liability, and 127 trillion in unfunded liabilities, including, but not limited to such items as the quantitative easing program.

The US debt is in fact now more than the debt of all the 27 EU nations combined.

This means that if you add to the US deficit all the other liabilities and financial obligations it would equates to every US citizen carrying a  $ 1,107.000 of that debt burden.

As to the US's ability to pay off this mounting debt and interest on the debt, which is mainly money borrowed from abroad,  the US Fed’s answer so far has been to print more dollars to pay the bills.

So far this scheme has worked relatively smooth, mainly because the dollar became the world’s reserve currency after the second world war and as a result most international trade is now conducted in dollars. This has also provided the US with the ability to call the shots ( manipulate) the figures when it concerns the actual value of the dollar in comparison to other currencies.
 
But printing dollars can not go on forever and will not only devalue it's value, but eventually also dilute the total money supply of the US. In essence

"Pay back time", where the US has to cough up the money it borrowed from its overseas creditors is coming closer every day. For the foreign creditors are also getting very wary about the US financial status. 

Unfortunately for the US,  just as small businesses object to getting paid with a deflated currency for goods they purchased abroad at a hard currency rate, so do the international trading partners of the US .

Sooner, rather than later, US trading partners will  require payment for all the money the US owes them or for new purchases and loans, in hard currencies, like the European Euro'  or Chinese Renminbe.

When that happens, the US will have to go onto the International Financial Marketplace to buy hard currencies with their inflated “weaker” dollars to pay of those debts abroad.  Obvious the result will  be that this creates an even bigger deficit for the US tax payer and the US Treasury.

The present hype about an improving US economy, booming stock market and other positive financial reports are all basically frantic attempt by political and economic forces to  delay the inevitable pay-back time and present a rosy picture of what in reality is a very dire situation.

EU-Digest

German confidence up as powerhouse of EU economy continues to expand - by Ben Chu

German firms are feeling more confident than at any time in the past 16 months, according to the latest survey of the sector.

The Ifo think tank’s business survey index for August outstripped market expectations by rising to 107.5, up from 106.2 in July.

That is Ifo’s highest since April 2012 and signals that the powerhouse of the European economy, led by Angela Merkel, is continuing to expand. GDP is estimated to have grown by 0.7% between April and June, having flatlined in the first quarter.

“The German economy continues surfing on the waves of optimism,” said Carsten Brzeski of ING.

Read more: German confidence up as powerhouse of EU economy continues to expand - Business News - Business - The Independent

French sceptical as Hollande points to economic recovery - by Sam Ball

François Hollande’s claim in an interview on Sunday that France is on the verge of economic recovery has been met with a heavy dose of scepticism from the country’s press and the President's political rivals..

For a country that has just officially entered into a triple-dip recession, it was a claim that was always going to raise a few eyebrows. During an interview with French television on Sunday - the French national holiday of Bastille Day - President François Hollande announced to the country that, finally, “The economic recovery is here”.

As proof, he pointed to an increase in industrial production as well as a small uptick in consumption in recent months.

However, weighed against negative growth in the first quarter of the year and record high numbers of unemployed - 3.26 million at last count - the President’s remarks have been met with a mixture of scepticism and even ridicule from his political rivals and in the French press.

During his interview, Hollande talked about combating his nation's apparent love of pessimism with a message of hope and optimism. But it seems that the general feeling in France is that the President is simply in denial.

Read more: French sceptical as Hollande points to economic recovery - FRANCE - ECONOMY - FRANCE 24

Are EU optimists right about European Economy?

Hope springs eternal in the hearts of the European optimists. Despite the fact that Europe is still mired in its longest post-war economic recession and despite every sign that austerity fatigue now characterizes Europe’s beleaguered periphery, the optimists cling to the hope that an economic recovery is just around the corner and that somehow Europe will muddle through its economic and political crisis.

Sadly this optimism is not well grounded. Rather it rests on a series of myths, which time will tell are no different from the wishful thinking entertained by European policymakers over the past three years.

Today the economic policy mix in the European periphery is little different from its immediate past. Although there has been some relaxation in the budget austerity being required of euro members by the European Commission, one still has countries deep in recession being forced to pursue budget austerity within a euro straitjacket. And they are now being required to do so at a time that Europe’s credit crunch persists, the external economic environment has deteriorated, and the euro is now appreciating.

Read more: The Washington Post

Eurozone, EU economic confidence firms - by Roddy Thomson

Clouds of economic gloom across the eurozone lifted Wednesday, as analysts hailed tentative signs of recovery with the latest European Commission data showing rising optimism among business leaders and consumers.

For the third month running, the EU's eurozone confidence index rose markedly against a background of rapidly easing tensions over Europe's three-year-old sovereign and banking debt crisis.

The index gained 1.4 points from the December level to reach 89.2, against a long-term average of 100.

While European stock markets fell on news the US economy contracted in the fourth quarter of last year, the euro jumped above $1.35 on the brighter data from the euozone, traders said.
And analysts wasted little time in declaring the positive signals as proof of recovery, even if consumer spending is expected to lag for some time.

Read more: AFP: Eurozone, EU economic confidence firms

Europe ain't dead yet...A win at the golf shows Europe a whole-in-one

Amid all the headlines about Spanish riots and the rise of Greek fascists, there was one news event this week that might suggest "Eurogeddon" is not as inevitable as we are constantly being tol.

This rare piece of good news was covered in the sports pages rather than the business section.
It was the excitement over Europe's comeback victory over the US in the Ryder Cup that should make commentators and think tanks a little slower to issue their relentless declarations that the euro is within months of collapse.

The fact that Jose Maria Olazabal and his fellow golfers won their biennial match against the US was not the point. A few nerveless putts are not going to lift anybody's spirits enough to somehow boost consumer confidence or stimulate new economic growth.

The significant thing is that when the winners were hugging, spraying champagne around and being congratulated for having a better team spirit than the Americans, they were doing all this under the European flag.

Read more: A win at the golf shows Europe a whole-in-one | The Australian

France’s borrowing costs fall in solid long-term bond auction that raises euro 7.4bn

 France’s borrowing costs fell in a bond auction Thursday that sold €7.4 billion ($9.7 billion) in long-term debt.

France has a significant amount of debt, and some investors are concerned it isn’t serious enough about reducing it. They are closely following the country’s presidential election campaign for signs that the next leader will limit spending and revive growth.

In the largest issue in France’s sale, the yield, or interest rate, on a 10-year bond edged down to 2.96 percent from 2.98 percent when it was last issued in April.

Another class of 10-year bond saw a far more significant drop to 2.85 percent from 3.29 percent when it was issued in January.

In another sign of investor confidence, demand was high and the amount of money raised was at the very top of the range set out by the French Treasury.

France’s borrowing costs fall in solid long-term bond auction that raises euro 7.4 bn($9.7bn) - The Washington Post

Europe stocks defy declines in US, Asia - by Gabriele Steinhauser

Stocks in Europe rose Wednesday, defying declines in the U.S. and Asia, as investors awaited potential new action from the Federal Reserve to kick start the world's largest economy.]

In a sign of the wild movements seen on financial and commodities markets in recent weeks, the price of gold, which had surged in recent weeks as investors fled into save-haven assets, plummeted 4.4 percent to $1,779, more than $100 below a new record reached just days ago.

Markets are likely to continue fluctuating ahead of Friday's speech by Fed Chairman Ben Bernanke at an economics conference in Jackson Hole, Wyoming. Investors hope Bernanke will signal a third round of massive bond-buying to boost the faltering U.S. recovery.

For more: Europe stocks defy declines in US, Asia - BusinessWeek