With most eyes fixed on Quantitative Easing let’s take a look at some global macro events.
World Trade Sags Yet Again
In yet another sign of the slowing global economy, World Trade, Once Rising, Is Starting to Sag Again
THE rapid recovery in world trade after the financial crisis appears to have slowed this spring and summer, raising new concerns about the global economy. Exports of many countries have stabilized at levels well under the peaks reached before the crisis sent world trade into a tailspin.
The accompanying charts show the dollar volume of monthly exports reported by 16 major countries since world trade peaked in July 2008.
The latest American figure is 10 percent below the peak. That compares with figures showing falls of 20 percent or more in most of Europe.
For some interesting currency and trade charts that accompany the above article, please see World Exports Level Off.
Striking Workers Shut Down Fuel Pipeline to Paris
Reuters reports Fuel to Paris reduced as French protests escalate
Striking French oil refinery workers shut down a fuel pipeline supplying Paris and its airports on Friday and airport workers grounded some flights as protests mounted to derail an unpopular pension reform.
France’s airport operator played down worries of fuel shortages, but strikes at all of the country’s 12 refineries and fuel depot blockades prompted motorists to stock up on petrol.
Truck drivers also were set to join the fray as momentum built for a day of street rallies on Saturday.
The widening protests have become the biggest challenge facing President Nicolas Sarkozy, who is struggling with low popularity ratings as he tries to appease financial markets by stemming a ballooning pension shortfall.
“This movement is deeply anchored in the country,” CGT union leader Bernard Thibault told LCI television. “The government is betting on this movement deteriorating, even breaking down. I think we have the means to disappoint them.”
“We’re filling up at petrol stations to save the fuel we have in depots as much as possible,” said one trucker in Paris’s southern suburb of Rungis. “But if this carries on, we won’t be able to last too long either. We’ll have to go fishing.”
Polls show two-thirds of people oppose Sarkozy’s plan to raise the minimum retirement age to 62 from 60 and change the age at which people can retire on a full pension to 67 from 65.
The government has been at loggerheads with unions for months over the issue and five rounds of strike action since the summer have disrupted public transport and air travel.
French Political Refugee Chimes In
My friend Bruno, a French political refugee has a few insights I would like to share. Bruno writes …
As a former French, now being a political refugee in Thailand, I would like to put things into context.
First, the retirement age is not automatically 60 in France. Only someone who has contributed to a pension plan for 40 years, or more precisely 160 quarters, can retire at the age of 60. Otherwise, the official retirement age is 65.
However, considering that French people have one of the longest life expectancy in the world, it is not rare to see a father and his son both retired, one age 85 or so, and the other between 60 and 65.
Thus, it is not surprising that the pension funds are broke. Until now, the government has been paying for the difference, thanks to a 8% annual budget deficit. But this won’t last and the day of reckoning is getting closer and closer.
As far as demonstrators are concerned, All of them belong to public companies: train (SNCF), metro (RATP), air traffic controllers, teachers and so on.
On top of that, they all benefit from special retirement conditions, which they are very afraid to lose. Most of them are entitled to retire between 50 and 55, depending on how terrible their working conditions are!
This too must be factored in, when figuring retirement age.
As for getting rid of these people, don’t even think about it! They would not hesitate to destroy the country. The government is afraid of them.
The “PATCO” Solution
Bruno’s reply was to comments I made on Tuesday in French Unions On Strike Against Pension Reform, Disrupt Rail, Air Traffic
The correct government response to this mess is to do what Reagan did to the PATCO workers, fire all the public union employees on strike and terminate their benefits.
Moreover, the French government should take this opportunity handed to them on a silver platter and go one step further to make a much needed change and dissolve all public unions. The same should happen in the US.
This would end the nonsense quickly and effectively. As in the US, there would be lines miles long to take those jobs at much lower wage and benefit levels.
Free Lunch Mentality Runs Deep
Bruno thinks the unions would destroy the country if Sarkozy tried what Reagan did. If so, France will be destroyed one way or another because this spending is not sustainable.
U.S. Backs Off Currency Dispute
In what may be pre-election jitters, or perhaps a sign that cooler heads are prevailing, U.S. backs off in currency dispute with China
The Obama administration backed away on Friday from a showdown with Beijing over the value of China’s currency that would have caused new frictions between the world’s only superpower and its largest creditor.
The Treasury Department delayed a much-anticipated decision on whether to label China as a currency manipulator until after the U.S. congressional elections on November 2 and a Group of 20 leaders summit in South Korea on November 11.
China left little doubt about the rancor that would ensue if it is branded as a currency manipulator — a largely symbolic move by the United States that would mandate more consultations with Beijing but no immediate penalties.
“The Chinese yuan should not be a scapegoat for the United States’ domestic economic problems,” Commerce Ministry spokesman Yao Jian said on Friday.
Search for Scapegoats
Regarding scapegoats, I said the same thing on Thursday in Geithner’s Search for Scapegoats Avoids the Harsh Truth No One Wants to Hear
Labeling China a currency manipulator would be a big mistake, but it is quite possible after the elections.
The open issue is whether or not Obama would sign such a measure.
Bruno writes …
Thanks for posting part of my Email.
Regarding the tittle “French political refugee”, I can imagine your readers wondering how on earth a French could end up being a political refugee, in Thailand on top of that!
I consider myself as a “political exile” for one main reason: I can’t stand the quasi-dictatorship inflicted on French people by the “Politically Correct”. It has reached a point where one can’t talk about anything sensitive, without being at risk of getting into serious trouble, including standing trial!
Thousands of French, living in Thailand, enjoy their freedom of speech and don’t hesitate to talk their mind, something they cannot do in France anymore.
Mike “Mish” Shedlock
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