Death Star Economics



Happy new year, happy old problems

Welcome back to the party, folks.

It’s a new year and despite the problems largely being the same, this is a time of anticipation. 2013 still has potential to be the best year ever.

After all, both British and Chinese factories recorded better output in December and shipping company Maersk says trade between Europe and Asia is set to expandNorth Korea‘s leader Kim Jong-un has announced his intent to make peace with South Korea. Also, Oil cartel Opec recorded $1tn in net revenues in 2012, providing more money for Middle-Eastern sovereign wealth funds to invest in London real estate.

Against the odds (…), there was progress on the fiscal cliff on the New Year’s Eve day. Senate approved Obama’s solution package and the House of Representatives followed suit last night. The summary:

Boehner voted to enact “Obama’s tax cuts”, the new de facto Bush tax cuts (which expired yesterday), and which will raise the budget deficit over the next decade by $4 trillion, yet which at the same time paradoxically also hiked taxes on nearly three quarters of Americans with an emphasis on the wealthiest 1%.

Strictly speaking, we did fall off the cliff, but as Jan-1 doesn’t count as a real day, things just about worked out. Of course, the deal is a half-baked mess of even less baked compromises and is already calling for reform. But there’s no time for that, because the debt ceiling is next in line. It would like to get lifted.

In two months, the U.S. will face the need to increase its borrowing limit. Additionally, the delayed $110 billion in spending cuts will again kick in. read article

In Europe, French president Francois Hollande is holding on to the most recent tax hikes of 75% income tax on income above €1m. Besides ruining is popularity ratings, Hollande pledged to solve France’ massive unemployment issue, he said in his New Year’s address. read article

Which brings us to the negative side of thingsEurope is still burning, despite the current absence of drama, and output from the eurozone’s factories continues to slump, led by Germany. Maybe we could bailout all of European manufacturing. Or the ECB could buy all the output, drive production up and create a whole new wholesale market of manufactured goods. Brussels could use the agriculture policy as a blueprint.

In the background, Denmark is trying to contain a four-year old financial crisis of its own.Triggered by a real estate bubble that got Danish banks in trouble after 2008, Denmark now has to cut costs and increase welfare. Yes, INcrease. With the rest of Scandinavia just a Smørrebrød’s throw away, Denmark welfare needs to stay competitive. The Danish economy is expected to have contracted by 0.4% in 2012. read article

So long.


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2 Responses

  1. princess1960 says:

    wellcome back ..i don’t make comment one by one for your analysis but in general
    EU..USA.ASIA ..ARE THE SAME SITUATION +_ if the leared who . in gv don’t understand what is the reall problem they ..can not find the resolution..
    IF the POLITICAL world who fighting for” EXUSIA”(egomania ) iam better than others ..they never will find solution
    IF the system we create ..are for 20% of some ”smart”‘ (they thinking) to ecmetalevun 80% of the people the world will be wors ..than was 1900..
    NOW ..2013 wishes is to be good for all ..who have dreams to be real ..
    i never put plan what to do in next we have one phrase (when you make plan god smile)
    i have dream ofcours but with my force and help of god
    and good honest people to be real wish is to meet some one i have trust ..(can this be)?
    i don’t know
    thank you for the article i am glad to reading
    ps ..i have to make perfect english -and computer ..
    to do some thing good (if i can)
    we just starting we have 354 day

  2. Lord Barrington says:

    Don’t worry, be happy and spend, spend, spend. Works for me.

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