Is Ukraine’s 18% Contraction in Q2 2009 Marking an ‘Improvement’?

• Preliminary data suggests the economy improved slightly with an 18% y/y contraction in Q2 2009 compared to a 20.3% decline in Q1 2009. The mild improvement was supported by the IMF which has disbursed US$10.9 billion till date. Industrial production grew on a month-over-month basis while the currency, the Hyrvnia gained strength. However, political uncertainty in Ukraine risks undoing these small economic gains.

France: Will Tighter Bonus Pay Rules Win International Approval?

• On August 25, French President Nicolas Sarkozy took the lead on tightening bonus payment rules for bankers. After a meeting with France’s top banks, president Sarkozy unveiled a set of new principles aimed at curbing excessive risk-taking. While France is trying to build international support for these new limits on banks’ bonuses, the next G-20 meeting on September 24-25, 2009 will show how successful his mission will turn out to be.

Privatbankier prophezeit Niedergang der USA

Der oberste Privatbankier der Schweiz hat genug von den USA. In einem Text sagt er dem Land den wirtschaftlichen Abstieg voraus und kritisiert die Aggressivität der Weltmacht.

Aus dem „Tagesanzeiger“: Tages-Anzeiger_Meier_Hummler_Niedergang der USA_260809

Bernanke’s Next Tasks Will Be Undoing His First

aus der heutigen NYT:

By EDMUND L. ANDREWS

WASHINGTON — As he looks forward to a second term as chairman of the Federal Reserve, Ben S. Bernanke’s biggest challenge will be to undo much of what made him a hero during his first term.

In nominating Mr. Bernanke on Tuesday, Mr. Obama praised the Fed chairman for his “bold action and out-of-the-box thinking,” saying it had helped avoid a repeat of the Great Depression.

But most of those bold actions — lending hundreds of billions of dollars to banks and businesses, slashing overnight interest rates to nearly zero, having the Fed almost single-handedly finance the mortgage market — will have to be reversed or rolled back over the next few years.

The Economic Comeback of Germany

Na ja, der Herr Sennholz ist schon 2 Jahre tot! Und so aktuell ist sein Beitrag. Historisch interessant, sicher nicht aktuell!

Mises Daily by Hans F. Sennholz | Posted on 8/25/2009 12:00:00 AM

Among other things, the appearance of the German Volkswagen  on American highways has stirred the imagination of the friends of free enterprise. Here, apparently, is another visual proof of the superiority of capitalism over socialism, another demonstration of West Germany’s abandonment of economic controls, another evidence that Germans have embraced the philosophy of the free market.

Deficits, debt, and the economy

Aus Paul Krugman’s Blog in der NYT. August 25, 2009, 2:38 pm

<!– — Updated: 2:38 pm –>So the CBO and OMB mid-session reviews are out; not much difference, but there’s more information in the OMB report (big pdf). So let me go with that.

It turns out that I was a little over-pessimistic in my assessment, mainly because the $9 trillion includes this year’s deficit, so we start from debt at 40% of GDP, not 50%. Overall, the OMB puts debt in 2019 at 76.5% of GDP; that figure is slightly exaggerated, however, because various financial rescues get counted as additions to the deficit even though taxpayers end up with additional assets. Net of these assets, the debt in 2019 is 68.9% of GDP.

Why the Senate Should Confirm Bernanke But Make the Fed More Accountable, Too

aus Robert Reich’s Blog:

 25. August 2009, 21:19:19

The President did the right thing in renominating Ben Bernanke to be Fed Chair, but the Senate should couple its vote to confirm him with new legislation requiring the Fed to be far more open about its doings.

The Exit Strategy from the Monetary and Fiscal Easing: Damned If You Do, Damned If You Don’t

Nouriel Roubini | Aug 24, 2009

In the last few months the world economy has been saved from a near depression. That feat has been achieved by a range of extraordinary government stimulus measures: In the U.S. and in China, and to a lesser extent in Europe, Japan and other countries, governments have pumped liquidity, slashed policy rates, cut taxes, primed demand and ring-fenced and back-stopped the financial system. All of this has worked, but it has worked at a cost. Governments have been spending and borrowing like never before. The question now is: how do they stop?

This is not a simple problem. Restore normality too soon and the risk is that a weak recovery will double dip into a second and deeper recession. Restore it too late and inflation will already be ingrained.

The Risk of a Double-Dip Recession is Rising

Wieder ein grossartiger Nouriel Roubini.

25. August 2009, 00:48:06 | Nouriel Roubini

From the Financial Times:

 

The global economy is starting to bottom out from the worst recession and financial crisis since the Great Depression. In the fourth quarter of 2008 and first quarter of 2009 the rate at which most advanced economies were contracting was similar to the gross domestic product free-fall in the early stage of the Depression. Then, late last year, policymakers who had been behind the curve finally started to use most of the weapons in their arsenal.

 

That effort worked and the free-fall of economic activity eased. There are three open questions now on the outlook. When will the global recession be over? What will be the shape of the economic recovery? Are there risks of a relapse?

The China Effect

from RGE Monitor:

Chinese Equities

The Shanghai composite index has fallen almost 20% from its August 4 peak, putting it within the traditional definition of a bear market. Thus far this year, however, the index has risen over 50%, and it has surged even more since its low in late 2008. Yet Chinese equities remain vulnerable given the liquidity outlook and the challenges of using relatively blunt tools to guide asset markets.

Correlations between Chinese and global equities (especially emerging market equities) have increased since 2007. Economies most reliant on Chinese investment, or on the commodities consumed by China, tend to show the most significant correlations. Yet even the markets of Central and Eastern Europe have shown greater co-movements. While Mainland markets are dominated by domestic investors and foreign investment is heavily restricted, they have vaguely led global markets, being among the first to begin to fall from overheated heights in early 2008 and the first to climb in late 2008 following China’s stimulus announcement. China’s linkages with global markets, to the extent that they exist, seem more macro than financial. The same government policies designed to avoid bubbles and limit further misallocation of capital—including the slowing of credit extension currently underway—could not only restrain frothy Chinese equities, some investors worry, but also suggest that the Chinese and global recovery will be weaker.