The wheels are coming off the whole of southern Europe

The Telegraph ^ | 7/10/2013 | Ambrose Evans-Pritchard

[mojito]

Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.

None of Euroland’s key actors seems willing to admit that the current strategy is untenable. They hope to paper over the cracks until the German elections in September, as if that is going to make any difference.

A leaked report from the European Commission confirms that Greece will miss its austerity targets yet again by a wide margin. It alleges that Greece lacks the “willingness and capacity” to collect taxes. In fact, Athens is missing targets because the economy is still in freefall and that is because of austerity overkill. The Greek think-tank IOBE expects GDP to fall 5pc this year. It has told journalists privately that the final figure may be -7pc. The Greek stabilisation is a mirage.

Italy’s slow crisis is again flaring up. Its debt trajectory has punched through the danger line over the past two years. The country’s €2.1 trillion (£1.8 trillion) debt – 129pc of GDP – may already be beyond the point of no return for a country without its own currency.

Standard & Poor’s did not say this outright when it downgraded the country to near-junk BBB on Tuesday. But if you read between the lines, it is close to saying the game is up for Italy.

[free from tyranny]

And WHO is responsible? Perhaps, even the lo-fo voter will be able to comprehend those DC pimps of both parties that ushered in all of the free trade agreements as well as snoozing while the ABC agencies along with the legal industry sky rocketed the cost of doing business in the U.S. And perhaps, just perhaps, even our fellow citizens whose ability for critical thought that has been nearly extinguished by a torrential downpour of modern entertainment will be enraged by the devastating effects of Federal Reserve engineered inflation.

[mojito]

The Rowing Song by Willy Wonka (aka Roald Dahl)

Round the world and home again
That's the sailor's way
Faster faster, faster faster

There's no earthly way of knowing
Which direction we are going
There's no knowing where we're rowing
Or which way the river's flowing

Is it raining, is it snowing
Is a hurricane a–blowing?

Not a speck of light is showing
So the danger must be growing
Are the fires of Hell a–glowing
Is the grisly reaper mowing?

Yes, the danger must be growing
For the rowers keep on rowing
And they're certainly not showing
Any signs that they are slowing.

[John W]

Ben Bernanke and the DJIA laugh at your wheels coming off.

[Gabrial]

Things are changing, though. Chinese labor rates have quadrupled over the last decade and US rates have been stagnant or dropping. Ford, Coleman and others have moved some jobs out of China.

http://www.reuters.com/article/2013/03/08/column-wasik-manufacturing-idUSL1N0C04C020130308

Labor rates in China vary widely based on province and city. Currently they run somewhere around $250 per month on the low end (Sichuan province) to $1,200 per month on the high end (Hong Kong) for skilled manufacturing labor. If you divide these monthly numbers by 160/hours per month you get an hourly rate between $1.60 per hour on the low end and $7.50 per hour on the high end. Still, much cheaper than in the US, but the gap is closing.

[DannyTN]

They might be changing but far too slowly to be a concern.

The Chinese have articles written every week about how they are about to implode, how their labor rates are skyrocketing, how their government own banks are going to collapse, etc.

It’s all misinformation to keep us from reacting to what they are doing to our industries.

[Carthego delenda est]

I was shopping for an insulated 1 gallon water jug a couple of weeks ago. I went to Walmart and they had 2 models to choose from. One had a spout on the bottom and the other had the spout on the top. That was the primary difference between the 2 as they were both just lumps of molded plastic. I was starting to favor the one with the spout on the bottom for ease of pouring ice water directly into my mouth when I noticed that it cost just over $18. The other brand with the spout on top cost just over $6. I probably would have bought the $18 one (Bubba Brand) until I noticed it was made in China. To my surprise, the $6 one (Coleman) was made in the U.S.A. Go figure.

[yefragetuwrabrumuy]

I knew a China scholar who assured me that Americans never have a clue as to what is going on in China. He added as a note that the Chinese don’t know, either.

[The Working Man]

They saw cheap stuff and didn’t consider that it was going to throw their own people out of work. That cheap stuff comes at the cost of your country’s industries and your citizen’s jobs.

---

Bravo! Well said.

[GeronL]

please.... lower priceare not bad for the economy as it allows you to spend more on other stuff

[Gabrial]

“The Chinese have articles written every week about how they are about to implode, how their labor rates are skyrocketing, how their government own banks are going to collapse, etc. It’s all misinformation to keep us from reacting to what they are doing to our industries.”

Uhhh, no.

I see Chinese propaganda all the time in advertising sections in the WSJ, Forbes, IBD., etc., and it is all the same crap cranked out by the Chinese government. Stuff like “...in China everything is great. All our workers are happy. Our technology rivals the most advanced Western countries. Our young people are highly trained...” all kinds of horsecrap. They are trying to attract businesses to China by painting a rosy picture. It pisses me off this crap gets printed in US publications but it does because they pay cash. I have absolutely no idea what you are talking about. Do you really think the Chinese government would release articles that said their country was about to implode, their labor rates were skyrocketing, and how their government owned banks were about to collapse? It is exactly the opposite. It is not the rosy picture they try and paint. They run sweatshops, they cheat on contracts, they steal technology, and they try and hack into all our vital computer systems. For all of these reasons, some US comapnies that fired Americans and moved jobs to China are begining to have buyers remorse. GE, Apple, Ford, Coleman, and others have begun to reverse course and move some (not enough) jobs out of China. The Chinese refuse to acknowledge that fact because it does not fit with their "rosy picture" narrative.

[Gabrial]

“...even our fellow citizens whose ability for critical thought that has been nearly extinguished by a torrential downpour of modern entertainment will be enraged by the devastating effects of Federal Reserve engineered inflation...”

Dang. You need to get a talk show!

[BfloGuy]

They saw cheap stuff and didn’t consider that it was going to throw their own people out of work. That cheap stuff comes at the cost of your country’s industries and your citizen’s jobs.

Oh, for Pete's sake. Trade -- even with China -- doesn't cause these problems. Government over-spending, regulation, and taxation cause these problems. But you always want to blame the individual, the citizen looking to get more for his buck Euro.

Pritchard thinks the answer is for each country to print its own currency into orbit. That, of course, gives the illusion temporarily of a growing economy. At the same time, it robs people of their savings and causes businesses to invest in projects that only look profitable because the central bank is price-controlling interest rates.

It inevitably leads to a recession.

I'm not much on the EU. But the Euro could have been a big success if all the countries that signed up for it had been fiscally responsible [i.e., done what they said they'd do].

[DannyTN]

"For all of these reasons, some US companies that fired Americans and moved jobs to China are begining to have buyers remorse."

They can't be having that much remorse. It sure hasn't shown up in the trade deficit numbers with China yet.

[DannyTN]

"For all of these reasons, some US companies that fired Americans and moved jobs to China are begining to have buyers remorse."

They can't be having that much remorse. It sure hasn't shown up in the trade deficit numbers with China yet.

[Gabrial]

Good point. The announcements made by the companies I mentioned were made this year. It will be interesting to see what the 2013 numbers look like.

[Fledermaus]

The only response you’ll get from DT is “tarrifs”!

[Pining_4_TX]

Ditto for the so-called economic development programs every town and state has going. Take money from one business to give to another, and take a big chunk out of it to pay politicians to travel and schmooz. And everybody seems to love it. Doesn’t anyone understand economics?

[Pining_4_TX]

Tariffs make everyone poorer, and protectionism doesn’t save or create jobs.

[central_va]

Tariffs make everyone poorer, and protectionism doesn’t save or create jobs.

Good thing you were not around at the founding of our nation. The first(or nearly) piece of legislation signed by President WAshington was the Tariff Act.

[Pining_4_TX]

True, I’m not quite that old, but tariffs have never done anything to enrich a nation. Every time the government intervenes in a free market, it causes distortions that have a ripple effect. Everyone wants the government to protect their business or occupation from competition, and it always fails.

Tariffs and Freedom
http://www.fee.org/the_freeman/detail/tariffs-and-freedom#axzz2Ynx0nfd1