The Cynical Economist

From Reuters

By Guillermo Parra-Bernal

SAO PAULO (Reuters) – Advanced economies face years of anemic growth and the risk of a double-dip recession as their citizens cope with sluggish employment and highly indebted governments, economist Nouriel Roubini said on Monday.

A sovereign debt crisis in the euro zone has rattled financial markets in recent weeks as investors worry that fiscal austerity measures dictated by a $1 trillion European Union-International Monetary Fund rescue plan could stifle already hobbled global growth.

In contrast, some emerging markets risk overheating and are showing symptoms of a potential asset bubble.

“Labor market conditions will remain very weak in some advanced economies,” said Roubini, known as Dr. Doom and most famous for having predicted the U.S. housing crisis.

“Savings will have to rise faster than consumption for the coming years. That is why growth will remain anemic,” Roubini, who heads U.S.-based economic consultants RGE Monitor, told attendants at a seminar in Sao Paulo.

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From WSJ
By Stephen Fidler

Václav Klaus, president of the Czech Republic, has never been too worried about upsetting his European Union partners. He risks doing so again with a piece just written for the libertarian Cato Institute’s Center for Global Liberty & Prosperity provocatively entitled “When Will the Euro Zone Collapse?”

His main conclusions are twofold.

First, the euro zone has failed: It hasn’t delivered growth and the economies of member states have not converged.  According to European Central Bank, average annual economic growth in the euro-zone countries was 3.4% in the 1970s, 2.4% in the 1980s and 2.2% in the 1990s. In the decade of the euro, from 2001 to 2009, it was just 1.1%.

“As a project that promised to be of considerable economic benefit to its members,” he says, “the euro zone has failed.”

His second conclusion is that, despite his provocative title, the euro zone will probably survive. “Of greater interest to non-experts and politicians (rather than economists) is the question of the collapse of the euro zone as an institution,” he says. “To that question, my answer is no, it will not collapse. So much political capital had been invested in the existence of the euro and its role as a ‘cement’ that binds the EU on its way to supra-nationality that in the foreseeable future the euro zone will surely not be abandoned.”

However, the price will be low growth for those inside the euro zone and costs for some, like the Czech Republic, outside. “To summarize, the European monetary union is not at risk of being abolished. The price of maintaining it will, however, continue to grow.”

Here it  is how it was done in USSR.

The only problem….BP doesn’t have an A-bomb.

But US have.

Too bad Obama is on vacation and do not have time to authorize the use of a small atomic charge to stop the leak

“The military don’t start wars. Politicians start wars.” – General William Westmoreland

“Older men declare war.  But it is the youth that must fight and die”  ~Herbert Hoover

“I have never advocated war except as a means of peace”  ~Ulysses S. Grant

Inspiration of the day by motivation speaker Nick Vujicic

From AP
By JEANNINE AVERSA

The economy trudges ahead yet debt dogs many Americans, stressing them out even as they firm up their own financial foundations.

There are new jobs produced but old worries persisting for people despite belt-tightening and boosted savings, according to an Associated Press-GfK poll.

About 46 percent of those surveyed say they’re suffering from debt-related stress, and half of that group described their stress as “great deal” or “quite a bit.” On the other hand, about 53 percent say they feel little or no stress at all.

That’s in line with findings from last year, even though times seem better today: The economy is growing and generating jobs, and households have made progress in repairing their financial footing, trimming debt, watching spending and saving more.

It’s a big turnaround from a year ago – a shrinking economy, jobs jettisoned as businesses struggled to survive the deepest recession since the 1930s.

So why aren’t the stressed – and the not-so-stressed – feeling better?

For starters, it just doesn’t feel much like a recovery to many people.

Unemployment is stubbornly high – 9.9 percent. The jobless face fierce competition for work. Those with a job are watching their paychecks shrink.

A growing number of people are at risk of falling into foreclosure, and only those with the most stellar credit probably can get a new loan. AP-GfK polls show that only 20 percent say the economy is good, compared with 15 percent last year.

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