LyrArc Article Gist
Japan's economic growth was 1.0% over the previous quarter in the 4th quarter 2013. Economic growth for the full year 2013 was 1.6%.

LyrArc Article Gist
Gikas Hardouvelis was finance minister during a crucial period of impementation of the 2012 bailout program for Greece from June 2013 to Jan. 2015. Here he outlines the mistakes he sees made by the IMF in not agreeing to the 7.2 billion payment to Greece in 2014, 4% of Greece GDP, with one third of that not a loan. At the fifth review of the 2012 bailout the EU commissioner for economic affiars, Pierre Muscovici , said Greece had completed its requirements and the 7.2 billion euro funding should be released. Yet he says the IMF to preserve leverage over a future Syriza administration in the 2015 elections decided to hold back. This made it harder for the Samaras administration to tell voters that it had completed the program a year earlier, and the lack of the funds hurt the Samaras administration as it erased signs of growth that had appeared in early 2014. Following this error he points to 4 mistakes made by the Syriza Tsipras government. The first was that it was bitterly opposed to the lenders (IMF, EU and ECB) and failed to focus on the economy. Hardouvelis points out that the maturity of the debt of 16.5 years and low interest rates meant that it was not the immediate issue facing Greece, and he calls it very manageable. This was not to say that it was important but with creditors worried about moral hazard, other issues could be taken up first. Another mistake was to allow a loss of liquidity to the private sector so that prospects of growth were erased. The new finance minister acted as if the $7.2 billion infusion was not important and let payments be delayed. Tsipras and Varoufakis let the uncertainty increase in the private sector, and let the economy decline all the way to the closing of the banks. How costly was this is evident from the IMF's own paper in Juy 2015 and the 3 page update of July 14, 2015, on the Greek debt, showing it cost Greece a total of 60 billion euros in additional financing needed and an additional 25 billion euros for the shock from the closing of the banking system. That 3 page IMF paper shows that within the space of one year a shocking amount of damage was done by Syriza left government- it says Greece went from being on track for reaching Debt to GDP of 105% by 2022 under the Samaras-Hardouvelis administration in July 2014, to 142% by June 2015, and with the closing of the banking system to 170% by July 2015. Some of this would have come from the IMF's own withholding of the 7.2 billion euro payment to the Samaras government. ...

LyrArc Article Gist
This article in the Economist magazine says Brazil's new president Michel Temer, once impeachment proceedings lead to the resignation of Dilma Rousseff, is only slightly less popular than her. Polls show 58% of Brazilians say Temer should be impeached close to the 61% for Rousseff, and his party is also affected by the Petrobras corruption scandal. Brazil's large trade unions supporting the Worker's Party of Rousseff see it as a "coup" or "golpe" and promise strikes, combined with large street protests, this comes as the country faces a second year of falling GDP at 3.8% according to the IMF. Brazil has a budget deficit of 10.8% and needs changes in public spending, including pension reforms, which are unlikely under Temer or his party the PMDB, or under the PMDB's Mr. Cunha. Some experts see the change in Brazil as part of a broader shift in Latin America, that happened in Argentina recently with the election of Mauricio Macri as president, towards governments that move to the centre in politics and reduce state intervention in the economy to stimulate growth. This is unlikely to happen in the short run, with society deeply divided and the area in front of the Brazilian Congress cordoned off to separate the opposing factions and rallies of political supporters....

LyrArc Article Gist
E.U. leaders reached a new agreement for solving the debt crisis in Greece and the broader eurozone debt crisis. This time an effort was made to come up with a solution that had some chance of working unlike earlier efforts. Earlier efforts that concentrated on austerity and burdened Greece and other countries in the debt crisis with higher interest rates came under severe criticism as unworkable. The result was higher unemployment, a shrinking economy, higher debt to GDP ratios, and contagion effects. The new plan commits to getting Greece on the path to growth. The European Financial Stability Facility will have powers to buy Greek bonds at their value in the secondary markets which means Greece would owe less to the EFSF, bringing down Greek debt. Greek debt maturities are to be extended over many years and interest rates lowered, with similiar actions for Portugal and Ireland. And private bondholders were given the option of taking 20% less on their bonds or extending the maturities of the bonds at lower interest rates. In return the bonds would have guarantees for repayment by the E.U. so that the private creditors would limit their losses. The draft document of the agreement says all the E.U. countries would commit to fiscal discipline....

LyrArc Article Gist
Polls taken before the June 16 elections in Greece show the leading New Democracy party and the Syriza party running very close to each other. Both Tsipras of the Syriza party and Antonio Samaras of New Democracy are calling for renegotiating the agreements with the IMF, EU and the EC, referred to as the troika, so that austerity programs do not fall too hard on ordinary Greeks. Tsipras says the goal is to reach "a just and viable European solution." He added in a news conference in Athens that "We don't claim there is plenty of money. Greeks are not asking for money. They are asking for work and the ability to make a living." The troika imposed a 22% reduction in the monthly minimum wage of 751 euros, or $930. This is unpopular in Greece and both New Democracy and Syriza now support reversing this, and extending unemployment benefits. Syriza proposes a moratorium on debt payments till growth is restored, and stabilizing public spending at 43% of GDP, below the 46% that is the eurozone average and above the 37% demanded by creditors. Syriza says it will scale back the value added tax which falls largely on the poor, raise taxes on the wealthy, and reduce tax breaks....

LyrArc Article Gist
Chinese are saving for the future as there is no safety net, no social security and no welfare or food stamps.And this means there will be a strong cutback in consumption and in sales of most products in China. Even before this global economic crisis China was becoming even more export oriented. In the last decade consumption as percentage of GDP actually declined from 47% to 37%. And the $586 billion stimulus has some measures to boost consumption but most of the money will go to infrastructure like new highways, railroads and airports. Housing construction is coming to a halt with home prices down 15% in Shenzen. And layoffs among exporters in the area north of Hong Kong like Li Kai which made 9 million sneakers for New Balance in 2007 will make 7 million in 2008, and is laying off 22% of its workers. Migrant workers are headed back home. The sales of foreign firms will be affected. GM's Buick brand saw sales decline an estimated 12% this year and JD Powers estimates decline in 2009 by 21%. Researcher BDA China sees cell phone sales down to 9% growth each year for next 5 years, down from 30% increases in the past 5 years....

LyrArc Article Gist
Schlesinger says Kuroda now appears to be behind the curve when he announced quantitative easing measures in Japan to fight deflation tendencies. With Japan in recession stronger action may be needed.

LyrArc Article Gist
Eurozone GDP declined by 0.6% for the fourth quarter of 2012, according to Eurostat. Full year 2012 GDP declined by 0.5%.

LyrArc Article Gist
The crisis came after finance minister FDP's Lindner wrote a paper calling for slashing corporate taxes, reducing welfare benefits, and reducing climate related regulations. It was seen as a provocation by the other partners Green's Habeck and SPD's Scholz leading to the firing of Lindner by Scholz. From the beginning of this coalition over its 4 years FDP has prevented major investments in the German economy the Social Democrats and Greens had promised in the last election. By contrast Biden invested over a trillion dollars in infrastructure and manufacturing leading to strong growth in the US and weak or no growth in the German economy. The Free Democrats are very conservative in spending, even though the Western economies need added investment in infrastructure. FDP's popularity is less than 4 percent. Social Democrats have lost trust with workers as a result of not keeping their promises for investment and growth. 

LyrArc Article Gist
The yen strengthened to 88 yen to the dollar, the strongest in 13 years, and Hirohisa Fujii, the new Finance Minister said that the government would not step in to weaken the yen even if it went up further. Thomas Harr a foreign exchange strategist at Standard Chartered in Singapore says the elections were a big boost for the yen. It created a new environment in Japanese politics for the first time since World War II as the LDP party was swept out of power. The hope is that by moving away from dependence on exports and reviving the domestic economy Japan can turn the page to a new chapter in its economic growth, away from the stagnation of the last two decades. But its a tricky balancing act between exporters and the domestic consumer.

LyrArc Article Gist
Japan's central bank chief, Shirakawa, has come under criticism from both the governing Democratic Party of Japan and the LDP for not acting strongly enough to support Japan's economic growth in 2012. He diluted efforts of setting a 1% inflation target by showing a lack of determination, saying the Bank of Japan could only do so much to tackle deflation, with effort to tackle structural inefficiencies required from the government. The impact of this was to strengthen the yen which weakens Japanese exporters. The LDP candidate for prime minister, Shinzo Abe, in Dec. 2012 general elections, was particularly critical of Shirakawa. Abe is likely to appoint Takatoshi Ito, a Tokyo University economist as the new central bank chief. Ito says Shirakawa talked down each BOJ monetary easing move with cautious language, describing it as a cold shower following each move. This is very different from the talk of the U.S. central bank chief Ben Bernanke, who gave clear signals to financial markets in his statements following monetary easing efforts of QE 1-3. Abe prefers a 2% inflation target and an activist central bank policy comparable to the U.S. Federal Reserve under Ben Bernanke. Financial markets and exchange rates for yen have responded positively to Abe's policy goals....

LyrArc Article Gist
Browne describes the excessive focus on "hard" GDP targets in China and the results in wasteful spending and neglect of other vital indicators of development such as healthcare, education, environment.

LyrArc Article Gist
Laffer says that starting in September 2008, the Bernanke Fed has radically increased the monetary base, comprised of currency in circulation, member bank reserves held at the Fed, and vault cash, by almost $1 trillion. See graph. The percent increase in the monetary base is the largest increase in the last 50 years by a factor of 10, he says, and its outside of anything we have ever experienced. The currency in circulation component which previously comprised 95% of the monetary base, has risen by a little less than 10% while bank reserves have increased 20 fold. With such large reserves banks are lending more money. The 12 month growth rate of M1 is now in the 15% range. But he sees reduced demand for money as confidence is restored in the banking system. He sees the drop in output and manufacturing and employment leading to further reduction in the demand for money. His view is that the reduced demand for money, and the rapid growth in the money supply, will lead to higher interest rates and inflation, unlike anything experienced in th 1970's. The backdrop to this is the huge liabilities taken on by the federal government in the auto and banking bailouts, and through the stimulus and other programs, with a deficit he projects at 13% of GDP. Steps the Fed could take such as issuing $1 trillion in new bonds to contract the monetary base, become difficult, considering that the Treasury plans issuance of $2 trillion in new bonds in the next 12 months. The alternative is to increase the reserve requirements of banks to restrain the growth in the money supply. A too rapid contraction of the money supply would cause the economy to go back into a recession. See Paul Krugman in the NYT, June 15, 2009, who cautions against reversing course. Krugman says the Fed increased reserve requirements in 1937, leading to putting the economy back into a slump. Krugman responds to Laffer by saying that the economy faces deflationary trends, and is in a liquidity trap where policymakers cannot cut interest rates further, making inflation less of a threat at this time. Krugman says overcrowding of private investment is not happening, as government is only stepping in where private investors have retreated....

LyrArc Article Gist
Constraints to future Argentine growth would be from the lack of access to credit from the banking sector for private sector businesses. Bank lending to the private sector is only 13% of GDp compared to 36% in Brazil. It is a result of the deep financial crisis Argentina suffered in 2003.

LyrArc Article Gist
India's industrial output declined 3.5% in March 2012, according to the statistics ministry, larger than the 1.5% expected.

LyrArc Article Gist
After 16 years of GDP growth the British economy is now facing big headwinds as the housing market falters badly. GDP grew at an annual rate of 1.1% in the 1st quarter 2008.The highly inbebted British consumer and the faltering financial markets which propelled the British economy and the area around London cause further problems for 2008 and 2009. And Gordon Brown does not have much room in the national budget to stimulate the economy with additional spending. Consumer price inflation is at 3.3% and expected to reach 45 so there is not much room to cut interest rates.