Some basic data [latest]
== Latest GDP growth 3.6%
== GDP growth expected for 06 3.3%
== Industrial Production growth 1.9%y/y
== Unemployment 10.05 5.0%
== tradebalance negative $753bn
== Current account negative $750bn
== Budget balance 05 negative 4.1% of GDP
short news
== Oil prices which stood per end September at $65.07
a barrel are now end November at $57.50.down 11.77%
since then and totally against trend which would demand
a price increase in the winter season. Our assumption
that that price was artificial due to hedge funds
seems to be confirmed.
The question which now arises is whether imposing
a windfall tax on the oil industry is the right way
of the government to react or if the earlier given
tax breaks to that industry should be revoked.
== Market received another confusing signal on how
the housing sector is faring. Housing starts are bouncing
around and, after a strong July, new home sales fell
sharply in August. But the median sales price still
rose 2.5% month on month in 8.05
US versus
China
Sinophobia in US becomes stronger and anxiety about
China increases. According to recent polls four in
ten people believe that China will be stronger than
the US within a decade. More than half of US citizens
believe that China may become militarily stronger
in the same decade and the same proportion reckon
China will have a negative effect on the future of
America’s economy. The soaring bilateral trade
surplus of China with America is a political problem.
Another problem the US have with
China is the question of intellectual property. China
is notorious for tolerating rampant intellectual property
theft. But there is an improvement in line as China’s
innovators themselves develop more and more patents,
the Chinese government will probably develop greater
interest in enforcing those patents.
As usual , if you are part of the party you get interested
in enjoying your fruits.
The price
of privilege
Too much foreign money is bad for America's economy
The truth is that the growing imbalances are weakening
America's economy, not only because of the extra foreign
debt the country has taken on, but because of the
domestic toll of being the world's consumer of last
resort. America's economic health depends too heavily
on housing wealth. Capital spending has been growing
at a healthy 9% a year. Nonetheless, corporate spending
as a share of GDP is still well below its average
for the past 25 years. Productivity growth has recently
slowed, so the lack of investment may be starting
to take its toll.
Moreover, this cyclical story conceals
a more serious problem. To generate the exports that
will eventually be needed to service its foreign debt,
America needs to invest a lot more in sectors that
produce goods and services that can be sent abroad.
Yet exports make up less than 10% of America's economy.
Whereas the world's surplus savers- China, Japan,
Germany have too many resources devoted to exports
and too few to expenditure at home, America has the
opposite problem.
In principle, the global saving glut
ought to help by keeping capital cheap. But because
the excess saving hails from abroad, it keeps the
US$ strong, so low interest rates continue to have
a bigger impact on America's property market than
on its export sector. Over the past four years, consumption
and residential investment together accounted for
over 90^% of the rise in America's GDP. Even more
striking 40% of all new private sector jobs have been
in construction, mortgage-broking and other areas
related to housing.
Even with interest rates historically
low, the share of disposable income devoted to debt
service is at a record 13.4%. And there is evidence
that consumers are heading for trouble. A rising proportion
of new mortgages are interest only and are linked
to short term interest
The budget deficit looks set to fall below 3% of GDP.
Low interest rates have fuelled a property boom, lulling
consumers into thinking that there is no need to save
and persuading politicians that it is possible to
have both guns and butter.
US education
system
In America universities compete for everything from
students to professors to football stars. Professors
complete for fedal research grants. Students compete
for college bursaries or research fellowships. Successful
institutions can't rest on their laurels.
It is all right to be useful. The emphasis on "Paying
dividends" remains a prominent feature of academic
culture. America has pioneered of art of forging links
between academy and industries. American universities
earn more than $1bn a year on royalties and license
fees. Dozens operate their own venture funds and many
more have "business incubators". What made
all this possible is that power is concentrated in
the hand of central
Actual economic situation
in US
Figures released end November 05 show that the US
economy grew at an annualised rate of 4.3% in the
third quarter, revised upward from 3.8% issued earlier.
That is despite the ravages wrought by hurricanes
in August and September,
The economy is also posing some difficult question
for the Fed The minutes of the November meeting suggested
that the Fed might stop raising rates quite soon.
Now the new numbers are making everybody reconsider
that Ben Bernanke Alan Greenspan's replacement, may
be looking for an excuse to prove he is tough on Inflation
when he takes office in January. Higher oil prices
may not have translated in to slower economic growth
yet, but they are creating inflation.
If you are
interested to hear more please contact
US
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