Tag Archives: Europe

News

Wall Street slashes GDP growth forecasts: recession on the horizon?

Leave a comment
The Democrats took over the House and Senate in 2007
The Democrats took over the House and Senate in 2007

James Pethokoukis says we’re doomed. (H/T ECM)

Excerpt:

 In the seven quarters since [August 2010], the U.S. economy has grown at an average annual clip of just 2.1%, including just 1.7% last year.

And right now, 2012 looks like more of the same. GDP expanded at a mere 1.9% pace in the first quarter.

And after a weak retail sales number today, Wall Street economists have been slashing their second-quarter GDP forecasts:

  • Goldman Sachs cut its forecast to 1.6% from 1.8%.
  • Bank of America/Merrill Lynch cut its forecast to 1.9% from 2.4%.
  • Macroeconomic Advisers cut its forecast to 1.8% from 2.0%.
  • CIBC World Markets cut its forecast to 2.0% from 2.3%.
  • Barclays Capital cut its forecast to 1.8% from 2.1%
  • Action Economics cut its forecast to 1.8% from 2.0%.

This analysis from JPMorgan provides a good summary:

After today’s retail sales report our best estimate is that second quarter real GDP is currently tracking a 2.0% annual growth rate, lower than our prior projection of 2.5%. Moreover, we see some downside risk to our new forecast. The largest reason for the downward revision is today’s retail sales report, which lowers our tracking of real consumer spending growth from 2.8% to 2.2%. … In addition, first quarter GDP, which currently prints at 1.9%, looks to be tracking closer to 1.7%. Given the weaker momentum in first half growth, achieving our second half outlook for 2% growth will require more things to go right than wrong, which hasn’t been the case recently.

The current White House forecast of 3% GDP growth this year looks hopelessly out of reach. And growth this anemic is probably not fast enough to generate enough sustained job growth to bring down the unemployment rate.

At this rate, I would say that we will be back in a recession within 12 months. Obama simply isn’t doing anything to stop the bleeding.

News

Europe is going socialist – what’s the worst that could happen?

Leave a comment
European Debt to GDP and Credit Rating
European Debt to GDP and Credit Rating

From MSN Money.

Excerpt:

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro.

EU officials have told Reuters the ideas are part of a range of contingency plans. They emphasized that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen – no one Reuters has spoken to expects Greece to leave the single currency area.

[…]The discussions have taken place in conference calls over the past six weeks, as concerns have grown that a radical-left coalition, SYRIZA, may win the second election, increasing the risk that Greece could renege on its EU/IMF bailout and therefore move closer to abandoning the currency.

No decisions have been taken on the calls, but members of the Eurogroup Working Group, which consists of euro zone deputy finance ministers and heads of treasury departments, have discussed the options in some detail, the sources said.

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

[…]Another source confirmed the discussions, including that the suspension of Schengen was among the options raised.

“These are not political discussions, these are discussions among finance experts who need to be prepared for any eventuality,” the second source said. “It is sensible planning, that is all, planning for the worst-case scenario.”

I noticed an article that came out in CNN Money that explained how American households had lost almost 40% of their net worth since 2007 – the exact year that Nancy Pelosi took control of the House and Harry Reid took control of the Senate. The Democrats have been running the European playbook since they took over in 2007. We are just a few steps behind the Europeans thanks to the borrow and spend policies of the Democrats.

News

European court finds that UK must give prisoners the right to vote

1 Comment

From the UK Telegraph.

Excerpt:

The European Court of Human Rights upheld a previous ruling that a blanket ban on inmates being able to vote was unlawful.

However, the court signalled that the UK government could decide which prisoners should be enfranchised, meaning serious offenders such as murderers and rapists could be excluded.

Judges may even be handed discretion to decide which criminals are allowed the vote.

The Government now has six months to comply with the ruling or face a raft of challenges and huge legal costs.

The decision will spark fury among MPs who voted overwhelmingly last year to not lift the 140 year blanket ban.

The case, now eight years old, has been at the centre of a deepening row in the UK over the influence of European judges on domestic law.

Ministers and MPs have insisted the decision on whether prisoners in a country can vote is a political one not a matter for the European court.

Last February, MPs backed a motion opposing the European judgment by a 234 to 22.

The vote was not binding but the Government has used it as evidence that Parliament’s wish is to maintain the ban.

Prisoners overwhelmingly vote for parties that are left-of-center, like the Democrats.