Sep 13, 2015 - Probably the best we can do now is to cross our fmgers and hope it doesn't happen. Here is the state of t
Publication: TThe Sunday Times, Classified, p C14 Date: 13 September 2015 Headline: State of play of the economy
eecono UNITED STATES
QUICK QUOTE
It is doing the best and the US Central Bank, called the Federal Reserve Bank or "the Fed", is
gal and (mamma mia!) Italy.
exaggerating a lot. China's other
arrest you."
Europe is in the early days of
data like electricity consumption,
China recently tried to address
manufacturing, imports and infla
the underlying cause, but it is not
to slow down the US economy so it
walks into a crowded
Quantitative Easing (QE), which
tion all indicate the economy isn't
so
the US is now ending. It has prom
growing at seven per cent or even
correctly. It devalued its currency,
The
10 per cent in 2009. The natural
The latest data showed US unem ployment was only 5.1 per cent, which is very good and down from
growth
they want to arrest you, they'll
growing its money supply, called
problem to have.
three
commentator said: "In China, if
Now, it looks like they have been
"A half-ton gorilla
Dr Larry Haverkamp The Last Word has
China was exaggerating a little.
are struggling, like Spain, Portu
devoting its time to figure out how doesn't grow too fast. It's a nice
world
Question:
well. Southern European counties
clear
that
it
is
doing
so
room. Where does it
ised to increase the money supply
6.5 per cent. It's hardly growing
as have other countries, but this
sit?
by 1.1 trillion Euros ($1.75t) over 18
at all.
isn't the magic wand that coun
months or "as long as it takes".
Answer: "Anywhere it wants."
It isn't that Europe is doing so badly, but it is far from its poten
In the past, economists have tole rated China's inaccuracies since everyone
assumed
they
were
tries may think it is. The bottom line is: Who knows? With China especially, the down
and
rate of unemployment is 5.0 per
tial, hence the need for QE. It
minor. Now, the fear is that China
China. They are not all perform
cent, which is as low as it can go
seemed to help the US economy, so
is doing much worse than it says
Australia has seen this in a big
ing the same and together, they
since there are always people who
Europe said: "Hey, we can do that
and it is dragging down the rest
way, with the collapse of its iron
will determine if the world enters
are in between jobs.
too!" So they did.
of the world.
engines:
The
US,
Europe
another recession.
The big question is not if but
Recall that we just came out of
when the Fed will do this. The best
one in 2008 and 2009, which
guess now is that it will happen at
again for six months. That's good for growth.
The irony is that no one knows if
turn could affect everyone else.
ore exports to China. Singapore
Take inflation. China said it was
is also
experiencing the pain
QE was responsible for the US eco
only 1.1 per cent but other data,
since China is our largest export
nomic recovery. It could be that
like wages, show inflation was
partner. It shows in the continual
economists call "The great reces
their monthly meeting on Sept 18
EUROPE
economies like the US which used
probably more. GDP is measured
downward revisions of Singapore's
sion" because it was the worst we
at 2.30am Singapore time. If you
The next big engine of growth is
QE would have recovered anyway,
after subtracting inflation so if
GDP, which is now 2.2 per cent for
have seen since the great depres
want some excitement, set your
Europe. The combined economies
and there is no cause and effect.
inflation
2015. That's close to a recession.
si�n of the 1930s.
alarm to wake you up and then
of the 28 countries in the Euro
turn on your television set or log
pean Union ( EU ) have a gross
With the massive stimulus used
is
understated,
·
then
GDP is overstated. There is more
CHINA
evidence too.
to fight it, we have used up most of
on to the Internet to hear what
domestic product (GDP) about the
China is the most infuriating, since
So far, China has mostly treated
the ammunition we need if there
happens.
same size as the US, and they are
it is probably doing the worst and
the symptoms by trying to prop
growing - �lthough more . slowly
holding back the rest of the world.
up the stock market. It's done
China officially expects its eco
things like telling investors not to
weekly to help our readers understand
nomy to grow by seven per cent
sell their shares, which would be
money matters better.
is another recession. Probably the
But even if the US Fed does raise
best we can do now is to cross our
interest rates (which I would say is
fmgers and hope it doesn't happen.
likely), it won't be by much -
Here is the state of the three engines of economic growth:
than the US.'!', The Northern European countries
probably by only 0.25 per cent.
like Germany,
And it probably won't raise rates
and the Netherlands are doing
France,
Belgium
this year. But no one believes it. The problem is everyone thought
Source: The Sunday Times © Singapore Press Holdings Limited. Permission required for reproduction.
laughed at anywhere else but is taken seriously in
China.
One
[email protected] An adjunct professor at SMU, Dr Haverkamp contributes this column
