|Today's Commentaries on Economic & Resource News by Ian R. Campbell FCPA FCA FCBV|
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The first discusses results from German Chancellor Merkel's ongoing visit to China where she is accompanied by two dozen German executives. The messaging in the article is that Ms. Merkel and her group are accomplishing much, but China is dictating the pace of negotiations and opening of China's economy to Germany. See German dreams, Chinese reality.
The second discusses China's promotion of a new strategic partnership with Africa - something I have previously mentioned in these commentaries. See Beijing promotes new strategic partnership with Africa.
Recall my summary of the book The Chinese Century: China was economically embarrassed by the West in prior centuries. The Chinese are favored with the attributes of long memories and patience.
German dreams, Chinese reality (Deutsche Welle, reading time 4 minutes). Beijing promotes new strategic partnership with Africa (WantChinaTimes - reading time 2 minutes.
Yesterday in Portugal Moody's downgraded that country's largest bank measured by capitalization to Caa2 from B2 - meaning Moody's thinks that bank (Banco Espirito Santo) is now vulnerable to default - when that bank announced delays in paying short-term debt to its parent company. There has been a lot of talk in the media recently of an economic recovery in Portugal. This (perhaps among other things) pushed the yield of Portuguese government debt up 13 basis points from Tuesday's close.
In Italy, May industrial production has been reported as having dropped by 1.2% month/month - as contrasted with the "economist expected" 0.2% gain.
Finally this morning, in Spain "Let's Gowex" - a large company that provides free WiFi for public spaces - filed for voluntary bankruptcy. The company's CEO resigned after telling the Board of Directors that the company's financial statements had been falsified for at least the past four years. One can only wonder how much creative accounting is occurring in the world today - and just how good corporate governance is in many companies.
One can also only wonder at how poor economic reports in the eurozone may impact the U.S. economy recovery at some point.
Economists Are Running Out Of Ways To Describe How Bad It Is In France (Business Insider - reading time 2 minutes). A Troubled Portuguese Bank Has The Country's Interest Rates Surging (Business Insider - reading time 2 minutes). And Now, Italy's Economic Recovery Is In Doubt (Business Insider - reading time 1 minute). A Big Spanish Tech Company Was Accused Of Being A Fraud - 5 Days Later The Company Collapsed (The Compliance Exchange - reading time 1 minute).
However, with what is going on in the eurozone from an overall inflation/deflation perspective, unless the European Central Bank moves more aggressively than it has to date inflation seems not to be the concern - what appears to be the greater risk of deflation seems to be.
For inflation to become a larger concern in the U.S. it seems to me that U.S. wages have to rise to a much greater degree than they have. After all, it has long been thought that about 70% of U.S. GDP can be attributed to the American consumer. The American consumer has to mean Main Street, not the 1% of the most wealthy Americans.
I suggest you take the time to read Fed Watch: Inflation Hysteria.
Fed Watch: Inflation Hysteria (Economist's View - reading time 8 minutes).
Perhaps nothing productive.
Plugged In: Half of Americans Can't Go a Day Without Phone, Study Says (NBC News - reading time 2 minutes).
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