Salient to Investors:
IMF growth projections have been revised downward almost everywhere, especially in Europe and the big emerging markets like China. The IMF projects the US to the strongest of the rich economies over the next four years – 3 percent versus 1.2 percent in Germany and France and 2.3 percent in Canada.
The US has emerged from the financial crisis of 2008 in better shape than its peers because of government, particularly the Fed. The Fed’s actions has been vindicated by the ECB which has abandoned an opposite course for three years with disastrous results.
Kenneth Rogoff and Carmen Reinhart say the US is performing better than most countries in similar circumstances in history.
Consumers are paying down debt and consumer confidence is at its highest levels since September 2007. Every American recovery since World War II has been led by housing, except this one.
Jamie Diamond at JP Morgan Chase says housing has turned the corner and expects economic growth in 2013 to be so strong that the Fed will have to raise interest rates.
Corporate profits as a percentage of GDP are at an all-time high and companies have $1.7 trillion in cash. American exports, up 45 percent in the past four years, as a percent of GDP are at a record high.
Key to long-term recoveries is reform and restructuring. US businesses have been quick to respond, with banks, auto companies and housing assisted by government intervention.
The Economist Magazine reversed its opposition to bailouts because of the way GM and Chrysler were forced to cut costs and become competitive.
The US economy is ready for a robust revival partly because of its dynamism and partly because of timely and intelligent actions of the Fed and the administration.
Ken Rogoff at Harvard said the US has not done badly as this was not an ordinary recession but a deep financial crisis which doesn’t happen very often in the US and other countries.
Amity Shlaes at the George W. Bush Institute said our deep financial crisis has to do with political policy. For example, if our federal government hadn’t guaranteed all housing everywhere we would have had less of a crisis. Shlaes says there is the political will on both sides to actually cut spending, particularly entitlements – it’s economically easy to fix Social Security.
Chrystia Freeland at Thomson Reuters Digital said housing resulted from policy by both parties. However she said the deregulation of the financial sector up to 2008 is one of the great failures. Freeland says we are entering a period of structural lousy jobs because of the global labor market, where a big chunk of the middle class become the working poor.
Joe Klein at Time said:
- Obama has been awful at explaining his policies and the state of the economy for the last four years.
- The fiscal cliff won’t happen because much of the blockage was Mitch McConnell set his goal that Obama not be reelected.
- We’re heading toward a demographic period of real difficulty as the white majority declines.
- We are finally beginning to understand what hasn’t worked in education. Vocational education’s making a big comeback.
- Skilled manufacturing jobs will return because our energy costs will be lower and labor costs are rising in Asia.
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Edward Skidelsky said health, respect, security, personality, harmony with nature, friendship, and leisure together make up a good life.
Robert Skidelsky said our society has become much more unequal than when Keynes, who underestimated the force of insatiability, lived. All have opportunity costs. There’s been a big increase in insecurity – about longevity of wealth, retirement, cuts in services, jobs. There was more security in the ’50s and ’60s, certainly in terms of jobs, than now. Human relationships, ties to families, leisure pursuits, civic activities don’t count in GDP statistics – all these things that give the feeling of leading a good life are ignored.
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Ann McElhinney said there’s been fracking in the US since 1947 – there are millions of fracked wells all across the country with no cases of water contamination.
Abrahm Lustgarten at Pro Publica said the fracking process today, in terms of volume, chemicals, slick water fracturing, horizontal drilling, is new in the last ten years at best. Also dramatically different from historical drilling is the scale on which this is happening.
Watch the video at http://globalpublicsquare.blogs.cnn.com/category/gps-episodes/ or read the transcript at http://transcripts.cnn.com/TRANSCRIPTS/1210/28/fzgps.01.html