Economic playoffs: Greece vs Japan vs China vs the US
Goldman Sachs' Jim O'Neill cautions that unless the fall out of the Greek debt restructuring results in fresh challenges for Italy and Spain, it’s best to remain unexcited about it.
February 12, 2012 4:19 by kippreport
After Germany showed weeks of positive signs, especially for January, the waters were muddied in this past week with the release of the December data. On top of disappointing orders data and surprisingly soft industrial production numbers, the final export data for the year showed quite a bit of weakness for the month. Given that the usually reliable surveys for January were so good, as well as another reported decline in unemployment, it is tempting to dismiss these numbers as backward looking, but it also gives me pause to reflect a little.
What the final export data does still not reveal is the extent of the importance of the so-called BRIC markets for Germany. But, checking in with Goldman Sachs’ Dirk Schumacher, he tells me that in the 3 months since November, the combined BRIC share is about 11.5 pct, higher than that of France, the single largest national market at 9 pct. China was itself around 6 pct, still just behind the Netherlands, the UK and the US, but it will soon leave these guys behind.
CHINA CONTINUES TO BE THE REAL KEY TO LIFE
As I mentioned earlier, in the six weeks of 2012 so far, China will have created the equivalent of half another Greece. Lots of fascinating anecdotes coming across my desk/inbox as usual. Some people sent me the FT story, which declared that Beijing office space has become more expensive than New York, according to Cushman and Wakefield, now $130 per square foot compared to $120. This is indeed interesting. But what was even more so, is that the comparable number in London is $239. Which should we worry about more?
Here’s a video of about the China Daily in London, which opened last year:
Speaking of which, the China Daily appears to have embarked on a major sales pitch around the world. According to some, they were being given out for free at the Liverpool Street station in London this week, which given they had an interview with yours truly; I was rather impressed about that. I was also sent an email picture showing that it was also being handed out in Washington DC. Now quite why the China Daily, in English, is set to be so appealing to such audiences is quite a topic for discussion, but the very fact they are pursuing it, is also interesting.
Then to top it off, I was sent a most interesting article in China Briefing from January 27 that includes a breakdown of China’s 2011 GDP by province this week, all collective $7.3 trillion of it. As part of it, there is a really cool map that shows in great clarity how the strongest growth rates are moving westward and north. But what intrigued me the most was just the sheer scale of some of these places. I counted 10 that have bigger economies than Greece, 4 of which are more than double Greece, three of which are big enough to individually register in the top 20 economies of the world – Guangdong, Shandong and Jiangsu. Four provinces now have GDP per capita above $10,000, based on the official data.
I suspect in reality, it is many more. Take a look for yourself at the link below:
JAPAN CHALLENGES RISING. HAS THE MOMENT ARRIVED?
I have found myself wondering more and more this week whether we should drag a few aging macro (and non macro) hedge fund guys back on to the scene, as the scenario when many of them lost fortunes in back in the 1990’s and Noughties seems to be more and more coming to the fore. You all know about the debt/GDP ratio of 220 pct, the declining household savings ratio to close to zero (while the overall national savings rate is higher, as a result of the household rate, it is declining), the trade balance moved into deficit in 2011, the current account surplus was the smallest in over 10 years, and of course, 10-year JGBs yield less than 1 pct, and the Yen trades at $77.65 and EUR 102.45. What you might not know if you are not an equities specialist or read the Nikkei Weekly, is the following that I picked up from a quick scan of my copy; “With Sony mired in confusion, Stringer passes baton to Hirai”, “Changing Market Conditions forcing Japan carmakers to shed old strategies”, “TV manufacturers scurrying to reprogram themselves, and then in Friday’s FT, “Revitalisation of industry shoots up the political agenda”.
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