As the Great Recession was easing, the consensus held that China, not the United States, would lead the world out. This would be a tectonic shift from a century of American economic power. But things didn’t turn out that way. China was badly mauled by a drop in demand during the downturn and more recently has…More
Category: International economy
The Boao Forum for Asia brings together high-level leaders from business, government and the academy to discuss the most pressing issues involving the Pacific Rim. On Sept. 4-6, its first North American conference will be held in Seattle. Gov. Jay Inslee and Bill Gates will be the keynote speakers. The theme will be “Energy, Resources…More
Let’s stipulate that using even a few of the 8,500 nuclear weapons believed to be in Russia’s stockpile would ruin much more than the Amerikans’ bull market. But short of that, as Vladimir Putin masses troops on the border with Ukraine and digests the Crimea, how concerned should we be about Russia’s effect on the…More
How much can a country stand and still go on with daily life? Mexico is a prime example. An estimated 50,000 people have been killed since President Felipe Calderon began waging an aggressive fight against the drug cartels — which supply our appetites. At the same time, Mexico is building a middle class that is becoming its majority.
So it’s no surprise that Costco Wholesale is buying out its partner in its Mexican division for $760.4 million. With 112 million people becoming a middle-class nation, that’s plenty of customers. Wal-Mart thinks so, too — enough for the company to face allegations of corrupt business practices. Thus the enigma of Mexico: A rapidly developing country, not least thanks to NAFTA and its displacement of American workers, and yet much corruption in government and business.
Mexico accounted for nearly $1.4 billion in Washington exports in 2011 (It is the state’s 13th largest trading partner and America’s second largest, totaling $280 billion. The recession and anti-immigrant hysteria have slowed the illegal immigration rate; in many cases opportunities are greater at home. The U.S. still imports substantial Mexican oil, although the big fields there, especially Cantarell, are in decline.More
The U.S. economy seems to be slowly healing and Wall Street is rallying, although stocks pulled back today and 13,000 seems a tough barrier to stay across. How could things go sideways? Let me count the ways.
1. Europe. The sovereign debt crisis hasn’t been fixed. Even Greece hasn’t been fixed. At best, European leaders and the bazooka infusion by the European Central Bank have bought time. As debt continues to reset at high rates, Germany remains at odds with the rest of the eurozone on a bailout. A breakup of the euro is still possible, with a resulting global depression. Even if the eurozone stays together, most European economies will be in recession or near-recession conditions for years.
2. Israel attacks Iran. Israel is very good at starting wars and reaching its initial goals; not so good at an exit strategy. If Jerusalem tries to take out Iran’s nuclear capability, it might set the program back for a time. But Iran might not be as passive as Iraq and Syria in the face of similar strikes. Iran has the capability to shut down oil traveling out of the Persian Gulf, causing a huge price spike and recession.More
Comments | More in Banking, China economy and business, Debt, Eurozone, Federal debt/deficit, Federal Reserve, Global economy, Great Recession, Great reset, International economy, Outlook, Stock market
Seattle becomes the sixth American city with service by Emirates Airline, the national airline of the United Arab Emirates. The airline is a big Boeing customer, helping make Washington the biggest state exporter to the Arabian peninsula country. Exports totaled $2.75 billion in 2011. In addition to the big transportation sector, $119 million in Washington agricultural products were exported, as well as $24 million in computer and electronics products.
According to Danny Sebright, President of the U.S.-U.A.E. Business Council, “the U.A.E. and Washington have shared a rich exchange of goods and ideas in the areas of aerospace, agriculture, information technology, and manufacturing. Washington-based companies such as Boeing Commercial Aircraft, Microsoft, and Starbucks have been instrumental in driving this flow and expansion of commerce. Further, this exchange has helped to support American jobs with a growing number of exports leaving Seattle’s port for the Emirates — a transit point to significant Asian markets, including China and India; and America’s top export market in the broader Middle East North Africa region.”More
Can the eurozone be saved? I’ll be writing about this Sunday in the Seattle Times. Nobel laureate economist Joseph Stiglitz is among the growing number of his colleagues who are pessimistic. In Project Syndicate, he writes:
Even if those from Europe’s northern countries are right in claiming that the euro would work if effective discipline could be imposed on others (I think they are wrong), they are deluding themselves with a morality play. It is fine to blame their southern compatriots for fiscal profligacy, or, in the case of Spain and Ireland, for letting free markets have free reign, without seeing where that would lead. But that doesn’t address today’s problem: huge debts, whether a result of private or public miscalculations, must be managed within the euro framework.
Public-sector cutbacks today do not solve the problem of yesterday’s profligacy; they simply push economies into deeper recessions. Europe’s leaders know this. They know that growth is needed. But, rather than deal with today’s problems and find a formula for growth, they prefer to deliver homilies about what some previous government should have done. This may be satisfying for the sermonizer, but it won’t solve Europe’s problems – and it won’t save the euro.
So, today’s poll:
Read on for the best econ links of the week and the haiku.More
So German Chancellor Angela Merkel stood up to the bankers and forced them to take a serious haircut to save the eurozone. Is she available to run for president in 2012? It’s bracing to see somebody show some (insert very long German word for intestinal fortitude) instead of doing another bailout where the enablers of crisis walk away with 100 cents on the dollar, or euro. Will it really work to stop the crisis in Italy from spreading to Spain and causing the breakup of the eurozone with all its ugly consequences on this side of the pond? Nobody knows.
Meanwhile, a report showed that GDP in the third quarter backed away from the stall speed of earlier this year. The bad news: Real disposable income fell and savings-rates sagged. The worse news: Even 2.5 percent GDP growth isn’t enough to fix the unemployment crisis. Which brings us to this week’s question:More
New U.S. Ambassador to China Gary Locke said all the right things here last week: Beijing should avoid unfair trading practices, buy more American goods, and increase intellectual property protection. “Right,” as in diplomatic. But like everyone else in government leadership, he’s unwilling to publicly speak the truth about the imbalances in trade with China and their causes.
The Economic Policy Institute reported today that our $278 billion trade deficit with China cost or displaced nearly 2.8 million U.S. jobs between 2001 and 2010, about 2 percent of total employment. That deficit has increased from $84 billion in 2001 when China entered the World Trade Organization. This doesn’t even account for China’s downward pressure on wages.
The biggest losers in terms of total jobs: California, Texas, New York, Illinois, Florida, North Carolina, Pennsylvania, Ohio, Massachusetts and Georgia. A total of 10 states saw the jobs eliminated or displaced exceed 2.2 percent of total employment (New Hampshire, California, Massachusetts, Oregon, North Carolina, Minnesota, Idaho, Vermont, Colorado and Rhode Island). Washington is an unusual winner, but even here the EPI analysis shows more than 52,000 net jobs displaced.More
Some studies come across my desk with a high “huh?” factor. One from Ball State University’s Center for Business and Economic Research on “export adaptability” is among them. It measures the “adaptability” of states to meet the changing demands of members of the Organization for Economic Cooperation and Development (OECD) from 1999 to 2009.
The findings: The top five states achieving this are Nevada, West Virginia, Delaware and Utah and Indiana. Washington ranks 29th. “All five states produce large amounts of machinery, pharmaceutical, chemical, electrical and medical items, goods sought by members of OECD,” the report finds. All I can guess is that Nevada, an economic disaster starting from such a low baseline of doing anything but gambling and building houses, is a statistical anomaly. The Silver State is no longer even among the top 10 states in mining as a percentage of the overall state economy. The Great Recession may also have had a distortive effect. It certainly goes against what we do know: Washington as among the leading trade states; a record year for the Port of Seattle and Boeing doing well, especially in the export market. Maybe Ball U is measuring slot machines. But, as Andy Grove said, only the paranoid survive.
Trade junkies might find a new report on Southern California’s import/export situation more useful. It finds that the ports of Los Angeles and Long Beach will continue their dominance in West Coast trade, at least in the near-term. Then there’s the opening of the widened Panama Canal in 2014.More