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Overseas – Some of the best news for U.S. companies and investors has been coming from overseas.
At home, the news remains bleak. In July, for example, U.S. retail sales slipped 0.1%—not the increase many economists were expecting. Heavily indebted and stressed about job losses, Americans seem reluctant to return to their free-spending ways.
Abroad, however, good news has come from unexpected places. Economists already suspected that China and other emerging economies were showing strength in recent months, the effect of the Chinese government’s aggressive stimulus programs.
Bloomberg – The yen declined to a two-week low versus the euro and weakened against the dollar after Yonhap News said North Korea launched a short-range missile, posing a threat to the region’s security.
South Korea’s won fell for the first time in three days versus the dollar after North Korea said it also “successfully” tested a nuclear weapon underground. The euro approached a four-month high against the dollar before a report that economists say will show German business confidence rose for a second month. The New Zealand dollar fell versus the greenback on concern export revenue will drop after the U.S. increased subsidies for dairy products.
Media Monitors Network – "The US Federal Reserve Bank, a private institution, is printing $1 trillion to buy toxic bonds to shore up the economy. Will this work? Perhaps temporarily but most economists predict a sharp decline in the value of the dollar within the next five years. With too many dollars in circulation and a massive debt, the dollar will fall in value vis-à-vis other currencies. The Chinese have already called for a new global reserve currency to replace the dollar as it did to the British pound after the Second World War."
Bloomberg – Billionaire investor George Soros said the current economic upheaval has its roots in the financial deregulation of the 1980s and signals the end of a free-market model that has since dominated capitalist countries.
Liberalization of the financial industry begun by the Reagan administration has led to a series of crises forcing government intervention, Soros told economists and bankers at a Feb. 20 private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.
Reuters – The G30, a group of high-profile economists and policy-makers, on Thursday called for changes in international financial regulation to help avoid future meltdowns, but its recommendations were vague and non-binding.
In findings that made no reference to the issue of executive compensation, the group of bankers and policy-makers indicated that big firms that pose a risk to the entire system should be subject to particularly close scrutiny.
The global economy has been reeling from a financial crisis that began with a popping U.S. housing bubble and has since infected the entire financial system, shaking confidence and breeding mistrust.
Seeking Alpha – In 1997, some observers feared an impending global recession as a result of the headwinds stemming from the Asian financial crisis. However, within two years, those fears had dissipated and were replaced with new concerns of irrational exuberance.
In contrast, the U.S. economic downturn beginning in 2008 initially appeared to be relatively benign. Most observers believed that a moderation in U.S. economic growth was essential to prevent an over-heating of the global economy. It was further believed that the problems confronting the U.S. economy were of its own making and would have little effect on global economic growth.
To be sure, some economists did forecast a U.S. recession in 2008 as a result of mounting home foreclosures. Such forecasts were however widely dismissed as being unduly alarmist during the first quarter of 2008.
