{"id":197,"date":"2011-09-11T11:16:09","date_gmt":"2011-09-11T15:16:09","guid":{"rendered":"http:\/\/www.sdaconseil.com\/blog\/?p=197"},"modified":"2011-09-11T11:18:45","modified_gmt":"2011-09-11T15:18:45","slug":"10-september-2011-the-cracks-of-london-to-widen","status":"publish","type":"post","link":"https:\/\/sdaconseil.com\/?p=197","title":{"rendered":"(10 september 2011) THE CRACKS OF LONDON TO WIDEN"},"content":{"rendered":"

<\/em>\"\"<\/a><\/p>\n

Economic growth is a hard thing to come by these days.\u00a0\u00a0 Politicians are first on the line to know about\u00a0that.\u00a0 Not because growth is today damned elusive in the West, but because politicians have generally taken the easy option to manage their economy for more than 20 years.\u00a0<\/p>\n

First, extensive financial deregulation let the tiger loose.\u00a0\u00a0 Financial markets are now so big that they think they can call most of the shots.\u00a0 Putting this tiger back into a cage will take a feat.\u00a0 One financial bubble may be an accident in the course of history, but two massive bubbles in the span of a decade speaks about the damage this tiger has created.\u00a0 Something is deeply wrong.<\/p>\n

Second, easy credit and domestic consumption have created an illusion of easy economic growth, well entertained by politicians.\u00a0 The resulting housing bubble and the financial crisis of 2008 may not have reached the scale of the Japanese crisis of 1990, but it is deep enough to lead the USA into the same rut.\u00a0 In the space of 15 years, a nation goes from large surpluses to a big hole, from plenty of room to manoeuvre, to a point where a question mark is put on the US dollar.\u00a0\u00a0 Quite suddenly it looks a bit more dramatic.<\/p>\n

The government, for the better or worse, is doing its bits to revive the economy:\u00a0 After QE I and QE II, a more modest QE III is on the planning board.\u00a0 But deleveraging will eventually come roosting to Washington.\u00a0 At the other end, the consumer is\u00a0still\u00a0licking its wounds, paying back debt, and hoping the roof of his house will not fall through.<\/p>\n

We are all finding out that real economic growth is built upon the sweat of productivity, innovation, and export markets.\u00a0 Hard stuff to manage in normal circumstances, but decidedly more difficult when you are facing a massive cost challenge from Asia.\u00a0\u00a0 We are discovering as well that off shoring manufacturing to China had an insidious trade off:\u00a0\u00a0 Yes\u00a0a better life for the consumer at Wal-Mart, but a great deal of growth options were signed off as well to emerging nations.\u00a0 Growing through exports is just becoming a tougher game for all, not least because technology is spreading far off shores. Here the weak US dollar is playing a useful prop for the time being.<\/p>\n

No wonder middle class in America is nervous.\u00a0\u00a0 Health and education costs have behaved as if completely excluded from the consumer inflation index.\u00a0 Full time jobs are hard to find and pay rises stay sub inflation. Business prospects look challenging.\u00a0 The emerging champions from Asia are now big enough to prowl in other emerging markets.\u00a0 Within a decade, and sooner than later,\u00a0they might feel ready to give it a try in Europe and America.\u00a0 Soon corporate middle management, the backbone of middle class, will have a renewed fight in its hands from this competitive challenge.\u00a0 If blue collars were swept away by technology, software and off shoring, then white shirts will discover that foreign engineers and managers are equally hungry and smart.<\/p>\n

Now, how will western politicians behave with this cauldron of angry middle class, elusive growth, a stubborn China, and a debt burden that keeps growing?\u00a0 We might soon find out. \u00a0Elections are forthcoming in France, Germany, USA and a change of brass in China is scheduled next year.\u00a0<\/p>\n

Will the cracks of the London riots widen and reach the lines of despairs in Athens?\u00a0\u00a0 Will politicians be tempted to take from one pocket of the consumer and ask him to spend from the other one?\u00a0 Will they find the words to tackle the difficult reforms lying ahead? \u00a0Or will politicians think it easier to change the rules of globalisation and pull back a little for a breathing space?\u00a0 \u00a0Amidst tension and worries, the search for the right compromises will loom large.<\/p>\n

Or\u00a0might the cracks of London just\u00a0lead to breaking the crystal?\u00a0<\/span><\/p>\n

Andr\u00e9 Du Sault<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Economic growth is a hard thing to come by these days.\u00a0\u00a0 Politicians are first on the line to know about\u00a0that.\u00a0 Not because growth is today damned elusive in the West, but because politicians have generally taken the easy option to manage their economy for more than 20 years.\u00a0 First, extensive financial deregulation let the tiger […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,8],"tags":[47,16,67,22,66,95],"_links":{"self":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/197"}],"collection":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=197"}],"version-history":[{"count":4,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/197\/revisions"}],"predecessor-version":[{"id":201,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=\/wp\/v2\/posts\/197\/revisions\/201"}],"wp:attachment":[{"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sdaconseil.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}