Steen Jakobsen, chief economist for Saxo Bank in Copenhagen, pinged me with a personal thought regarding Europe:
"I am just back from Italy and Russia and what really strikes me is how people have given up, and I mean totally given up. To my mind we are entering extremely difficult time where balancing EU, US debt and social tension makes for a black Swan event."
Europe is close to losing a generation of youth in Spain, Ireland, Portugal and Italy, with between 20 and 45 per cent youth unemployment. To avoid losing this generation, European politicians and the ECB need to come up with a radically new game plan.
First, we need to stop pretending we can dance around the word "default" Let me help: if your income is less than your expenses and you can't borrow money, you are done, finito, insolvent and in default.
That is another lesson from Greece; the longer you avoid facing the truth, the more you solve debt with debt, the deeper the hole you are digging as your new beginning necessitates a larger and large initial trauma.
Politicians tend to underestimate their voters ability to deal with a crisis. If the population at large knows it's coming, they can and will deal with it. Many of today's generation of politicians forget that their grandparents lived through two wars, the depression and several stock market crashes only to create the most robust growth era in modern history.
Yes, there will be some contagion and some short-term high volatility if Greece goes the default rout, but as they say in the world of sports: no pain, no gain.
In fact, a crisis 2.0 could be what is needed to create both the economic and political platform that will solve Europe's problems: namely, a fiscal union. Do not misunderstand me – I am agnostic on the EU's existential question, but the EU was created as a political institution, not an economic one. Europe is a house without a financial foundation: no ministry of finance.
The time has come for some major decisions if the great European experiment is to survive. The Euro Zone needs a Ministry of Finance, one that should probably issue Euro Bonds from EFSF/ESM.
The idea that one day the voters of Europe will rise up and embrace the EU idea is fading fast. The rising social tension in all of Europe shows us that – similar to my impatience with the Danish national football team – time is running out. Let's for once hear some straight talk from the EU and the ECB and let's put an end to the extend-and-pretend nonsense and attempts to pull the wool over the public's eyes. Otherwise, Europe will continue to score own goals. That's a pity, as a new start – even if painful at first – could set up decades of sustainable growth as more transparency and less leverage would bring more stable financial markets.
Nanny State or a Breakup?
Steen says " I am agnostic on the EU's existential question, but the EU was created as a political institution, not an economic one. Europe is a house without a financial foundation: no ministry of finance."
That is precisely the problem. Unfortunately, the only solutions I see are as follows:
Breakup of the Eurozone
Creation of the European Nanny State
I have written about the "Nanny State" several times.
...Is Germany unfit for the Euro or is the Euro unfit for the PIIGS? Isn't that the real question?
Such discussions are the consequences of a currency union with a one size fits all interest rate policy combined with widely varying fiscal policies, pension structures, union benefits, and other problems.
Arguably, the Euro experiment was never meant to work in the first place, at least for such a complicated heterogeneous mix.
Rather than admit the innumerable mistakes has has made, ECB president Jean-Claude Trichet has continually upped the ante on taxpayers with increasingly risky measures such as loading up the ECB with junk bonds from Greece and Ireland in clear violation of the Maastricht Treaty.
Today, in the wake of still more failures of the bond market to follow his wishes, Trichet openly calls for a bold new initiative, one that would effectively transform the Euro-Zone, into a fiscal Nanny-Zone as well. ....
My friend "HB" commented
This is what the fools that rule the Eurocracy want - a huge centralized nanny state in which taxes are 'harmonized' and citizens can no longer choose between low and high tax nations.
It is the absolutely worst thing that could possibly happen. It would be better for the euro-area to break up.
Trichet was one of the architects of the Maastricht Treaty, and he has violated that treaty at will ever since.
Now he wants to completely trash the treaty, effectively transforming the Euro-Zone into a nanny-zone "Eurocracy".
When will Germany finally step up to the plate and tell Jean-Claude Trichet in no unmistakable terms where to shove it?
"At the moment we are just trying to win time in the hope of preventing contagion to other weak countries," said one senior lawmaker from a party in Merkel's conservative coalition.
"The truth is that for Greece, what we are really looking for is the right place to crash the plane. It should not be over a city, but in the countryside if possible."
Deutsche Bank chief economist Thomas Mayer wrote this month that if political leaders did not offer bold new solutions, the outcome could be determined by grass-roots events -- a rebellion by Greek or German lawmakers, or a Greek bank run.
"Given the recent momentum in the political debate, we would give such an outcome over the coming 6-12 months the highest probability," he wrote.
We all realize the plane is going to crash. The debate now is when, where, and how big the crater.
3-D printing has been around for a while but most have probably not seen or heard of it. The term "printing" is a misnomer. The results are something more akin to what you might see out of a Star-Trek replicator.
Businesses in the South Park district of San Francisco generally sell either Web technology or sandwiches and burritos. Bespoke Innovations plans to sell designer body parts.
The company is using advances in a technology known as 3-D printing to create prosthetic limb casings wrapped in embroidered leather, shimmering metal or whatever else someone might want.
Scott Summit, a co-founder of Bespoke, and his partner, an orthopedic surgeon, are set to open a studio this fall where they will sell the limb coverings and experiment with printing entire customized limbs that could cost a tenth of comparable artificial limbs made using traditional methods. And they will be dishwasher-safe, too.
A 3-D printer, which has nothing to do with paper printers, creates an object by stacking one layer of material — typically plastic or metal — on top of another, much the same way a pastry chef makes baklava with sheets of phyllo dough.
A California start-up is even working on building houses. Its printer, which would fit on a tractor-trailer, would use patterns delivered by computer, squirt out layers of special concrete and build entire walls that could be connected to form the basis of a house.
A typical 3-D printer can cost from $10,000 to more than $100,000. Stratasys and 3D Systems are among the industry leaders. And MakerBot Industries sells a hobbyist kit for under $1,000.
As 3-D printing machines have improved and fallen in cost along with the materials used to make products, new businesses have cropped up.
Freedom of Creation, based in Amsterdam, designs and prints exotic furniture and other fixtures for hotels and restaurants. It also makes iPhone cases for Apple, eye cream bottles for L'Oreal and jewelry and handbags for sale on its Web site.
"We used to take two months to build $100,000 models," said Charles Overy, the founder of LGM. "Well, that type of work is gone because developers aren't putting up that type of money anymore."
Now, he said, he is building $2,000 models using an architect's design and homegrown software for a 3-D printer. He can turn around a model in one night.
Mr. Summit and his partner, Kenneth B. Trauner, the orthopedic surgeon, have built some test models of full legs that have sophisticated features like body symmetry, locking knees and flexing ankles. One artistic design is metal-plated in some areas and leather-wrapped in others.
"It costs $5,000 to $6,000 to print one of these legs, and it has features that aren't even found in legs that cost $60,000 today," Mr. Summit said.
"We want the people to have input and pick out their options," he added. "It's about going from the Model T to something like a Mini that has 10 million permutations."
Imagine being able to print your own shoes or keys. Some top engineers are betting that home fabrication machines could soon be as common in the household as toaster ovens.
They sound cutting-edge, but 3-D printers have been around for more than 20 years. Until recently, they've been multimillion-dollar machines used mainly by manufacturers like automobile and aerospace companies. Now, the technology has evolved far enough that cheap devices are making 3-D printing accessible to the masses, spurring all types of creativity. Hobbyists are printing their own action figures, doctors have used the systems to print artificial organs, and chefs are testing out ways to print gourmet meals.
Rajeev Kulkarni, vice president of global engineering at 3D Systems, estimates that the cheapest printers five years ago ranged from $25,000 to $50,000. Now, they're available for as little as $1,000.
Georgia Tech research scientist Grant Schindler is already building tools for the wave of home 3-D hobbyists he sees emerging. He recently released an iPhone app that allows users to scan and print models of their faces on home fabrication machines.
He thinks 3-D printers will really take off when average people find the right use for them.
"It's more like 10 years before it comes really common," he said. "And there has to be a killer app -- maybe jewelry is it. There needs to be something that everyone wants, that everyone says 'I need this 3-D printer.'"
They are machines straight out of ''Star Trek'' or ''The Jetsons.''
It's now possible for anyone with an idea to create tangible items -- flowerpots, cell phone cases, jewelry, or nearly anything -- from 3-D printers. All the person has to do is send a design for a product to a 3-D printer and out pops a real 3-D object.
Most 3-D printer owners are big businesses or tinkerers, because the machines are so expensive. But some innovators are using this technology to start new businesses and earn money.
Andreas, an IT guy in Austria who didn't want his last name used for this article, started out as a hobbyist. He customizes Lego ''minifigs'' -- the plastic characters that come with a Lego toy set -- to create historically accurate dioramas, or three-dimensional models.
Lego had stopped making a specific hat that made his Napoleonic figures accurate. With no experience in product design and no access to a factory, he designed a new hat and had it 3-D printed.
The resulting product was so popular among other Lego customizers, he now sells the hats along with hundreds of other items through a service called Shapeways, which manufactures items with its 3-D printers and sells and distributes them through its website.
About 10% of the 2,000 designers selling through Shapeways are making ''decent money'' -- with the most popular bringing in excess of thousands of dollars a month, says CEO Peter Weijmarshausen. He concedes that's not really a lot of money yet, "but I see this year, the more successful designers will make a living at it.''
This is damn cool. It is obviously price deflationary as well. What used to be extremely expensive to model and work through design changes in terms of both price and time, is now easy and inexpensive.
Overall self-reported daily consumer spending in stores, restaurants, gas stations, and online averaged $69 per day during June -- unchanged from May, and essentially the same as the $67 average of June 2010.
Upper-income spending (among Americans making $90,000 or more annually) averaged $124 per day in June -- essentially the same as the $126 of May and not much better than the $119 average of June 2010. Although these Americans are likely to have more disposable income to spend freely when they choose, they continue to hold back and to spend within the "new normal" range -- which is far below what they were spending three years ago.
Implications
Flat consumer spending is consistent with today's low level of economic confidence. It also squares with the idea that the U.S. economy remained in a so-called "soft patch" during the second quarter. Further, even though gas prices have declined -- which would theoretically help increase consumer spending -- pump prices remain far above year-ago levels, and continue to reduce other spending.
The U.S. economy could regain momentum as Japanese auto plants in the U.S. return to building cars in the months ahead. Some economists feel the overall impact of the crisis in Japan on the supply chain worldwide, and on U.S. jobs in particular, has been greatly underestimated. If gas prices continue to decline, they should also have a positive, tax-cut-like effect. However, to this point, consumer spending shows no signs of such a rebound.
Soft Patch Myth
I believe this soft-patch, blame-Japan theory is not "greatly underestimated" but rather "greatly overestimated" and dreams of a huge second-half recovery will soon be shattered.
Regardless, it is illogical to blame high gasoline prices for lack of consumer spending when gasoline prices are part of consumer spending!
High gasoline prices may effect other spending, but Gallup includes gasoline in its daily consumer spending survey.
That said, consumers have a lot to be concerned about including a dearth of jobs and lack of real wage gains. Both of those negatives are likely to continue. Moreover, there is no pent-up demand for autos, and housing remains in the gutter. Therefore, there is little reason reason to believe in second-half miracles.
Postări
Niciun comentariu:
Trimiteți un comentariu