Re: RE:what is going on???

[ALI KADRI <akadri_00@xxxxxxxxx>]

The French economy experienced a most serious drop.
Until very recently it was the top performer in
western Europe. unemployment rates rose putting a very
pro labour minister under a lot of pressure. But the
35 hours week has been excluded as a cause of that.
the ECB's Wim D refuses to budge on the rate although
the French and the Latin camp in Europe would prefer
to see a rate cut. The ecb forecasters say that Europe
will not go in recession and in the worst case
scenario this will be shallow one. in any case Wim D
is bracing for the forthcoming transition where it is
likely that a lot of bad money is going to be
transformed into euro. so it is possible that a rate
cut and bad money may put too many euros on the market
further bringing it down.
but the reasons for holding to the rate are more
malign from what I hear.
basing themselves on the assumption that the ec
economy is going to better perform vis a vis the US
and certainly Japan, along with higher rates and
social stability, the euro is going to take its place
alongside the dollar as a parallel world currency.
could this happen? Politics aside, many funds are
switching to euros already; however, in this case
politics is king and European security is always at
stake.
But no matter what shape the recessin takes in the US,
East Asia, and china this time as well, may be at
highest risk. the recent recovery was pulled off with
an investment output ratio of about half of that of
the mid nineties. the recovery was export led which
here implies the obvious: a us slowdown equals an east
Asia slow down. Indonesia, the biggest, is still under
for that matter.
and china this time around may get it as well. china
says we can handle the entry into wto depending on
where we are when we enter. so if they are in good
shape they can offset the fallout from losses in
soe's, finance, telecom, and rural push disasters. too
much to handle in any case without a good dose of
repression, and the worst to come when exports slacken
off.

My initial uneducated guess about the US tells me that
jim is correct in his gloomy forecast. But I think
there are two sides to the matter: war and economy.
the enduring war acts like an automatic stabilizer
that could generate growth devoid of social gains. In
that war at will is a good sign for the markets and
economy. While for the economy itself  there has not
been a disengagement of capital commensurate with the
bad accounts.


--- jdevine@xxxxxxx wrote:
> Michael Perelman writes:
> >... I had been meaning to ask people why there has
> been so little activity on the list regarding
> economic matters....
>
> >The business press is now regularly talking about
> deflation, if only to say that it is unlikely to get
> out of hand. We have had relatively little to say
> about deflation, except for a brief discussion
> regarding Irving Fisher. I assume that the "wartime"
> efforts will create enormous fiscal damage as funds
> are siphon away from vital activities.  What will
> this mean? How will exporting countries fare if the
> consumer of last resort falters?
>
> >What will the effect be of bailing out our allies'
> in order to maintain their support?<
>
> I have an article in the upcoming CANADIAN DIMENSION
> on a lot of this, though it's biased by my writing
> from the US.
>
> At this point, deflation isn't sustained enough to
> count as the destruction type of deflation. Crucial
> is that there hasn't been a steady decline of money
> wages yet.
>
> Further, the biz press now says that it looks like a
> recovery soon in the US, since the stock market has
> been doing so well (sic). The line is that it's a
> V-shaped recession/recovery process, not a U or the
> dreaded L. Of course, the papers say the recovery is
> going to be weak, so it could be a W, as in the
> early 1980s (the back-to-back recesssions).
>
> All of this ignores the global nature of the current
> recession -- which seems to officially hit Germany.
> It also ignores the truly outstanding debts that US
> consumers hold, along with the whole Godley-Izureta
> (sp?) analysis -- or if you prefer, my similar
> "three bears" analysis. And if deflation occurs,
> then we're in deep yoghurt.
>
> On top of that, one of the articles about the rising
> optimism among biz pundits quoted one as saying that
> it looks like recovery will come soon -- but that US
> unemployment will rise to 6 percent. That shows how
> there are two -- class -- views of what "recovery"
> really means.
>
> Frankly, it looks dire. The businesses have switched
> from relative surplus-value extraction (technical
> progress, mechanization) to absolute surplus-value
> extraction (wage cuts, speed-up, stretch-out) as the
> main mode. This simply makes the recession worse,
> especially with all that consumer debt out there.
>
> -- Jim Devine
>
>
>
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