EU back in recession; Needed: A financial system to tackle inequality; Rise of the iCrowd; A billion tourists this year

1 EU back in recession (Zoe Schneeweiss, Bloomberg) The euro-area economy was pushed into a recession for the second time in four years as trade slowed and government spending declined. Gross domestic product in the 17-nation currency bloc slipped 0.1% in the third quarter from the previous three months, when it fell 0.2%, the European Union’s statistics office in Luxembourg said, confirming an initial estimate published on November 15. Gross fixed capital formation dropped 0.7% from the previous three months, when it fell 1.8%, while consumer spending was unchanged. Government spending declined 0.2% after a 0.1% drop in the second quarter.

European governments, fighting the sovereign debt crisis that started in 2009, on November 27 eased the terms on emergency aid for Greece and are counting on a bond buyback as a market-based way of cutting the country’s debt, paving the way for continued aid payouts. Economists question whether that will be enough to keep the country in the single currency.

In Germany, Europe’s largest economy, GDP rose 0.2% in the third quarter, down from 0.3% in the previous three months. France’s economy expanded 0.2%, while Italy’s GDP fell 0.2%. In Spain, which locked in a bank bailout earlier this year, GDP declined 0.3%. The economies of Cyprus, Austria, Portugal and the Netherlands also contracted. 

2 German growth forecast cut (The Guardian) The Bundesbank has cut its growth forecasts for the German economy, warning that the financial crisis will have a much greater impact on Europe's largest economy. Next year looks particularly weak, with Germany at some risk of falling into recession in the months ahead.

The Bundesbank expects growth of 0.7% this year, down from 1%. In 2013 it expects growth of just 0.4% (not a typo), down from 1.6%previously. It also predicts stronger growth in 2014, with GDP expanding by 1.9%. The Bundesbank said it was clear that the core of the eurozone was feeling the full impact of the downturn in the periphery.

3 Needed: Financial system to tackle inequality (Joseph Stiglitz in The Guardian) A comprehensive programme to increase economic opportunity and reduce inequality is needed – its goal being to remove, within the next decade, America's distinction as the advanced country with the highest inequality and the least social mobility. This implies, among other things, a fair tax system that is more progressive and eliminates the distortions and loopholes that allow speculators to pay taxes at a lower effective rate than those who work for a living, and that enable the rich to use the Cayman Islands to avoid paying their fair share.

America – and the world – would also benefit from a US energy policy that reduces reliance on imports not just by increasing domestic production, but also by cutting consumption, and that recognises the risks posed by global warming. Moreover, America's science and technology policy must reflect an understanding that long-term increases in living standards depend upon productivity growth, which reflects technological progress that assumes a solid foundation of basic research.

Finally, the US needs a financial system that serves all of society, rather than operating as if it were an end in itself. That means that the system's focus must shift from speculative and proprietary trading to lending and job creation, which implies reforms of financial-sector regulation, and of anti-trust and corporate-governance laws, together with adequate enforcement to ensure that markets do not become rigged casinos.

4 Rise of the iCrowd (Sami Mahroum in Khaleej Times) Countries affected by the Arab Spring now face political spheres that are shaped by crowd dynamics, rather than by genuine political or ideological movements. Crowds are the opposite of organisations; rather than being dominated by rigid hierarchies, they are often led by individuals with no formal rank. In “crowd politics,” emotions often supersede goals.

The real challenge facing the Arab Spring countries, at least in the short term, is not ideological, but institutional. Governments must find a way to prevent small groups from using the crowd effect as political capital, thereby causing crowd sizes to become more decisive than the number of ballots cast. But traditional democratic institutions, such as political parties, parliaments, and consultation committees, are not experienced in coping with such challenges.

Social media are both part of the problem and part of the solution. Unlike Eastern Europe in the late 1980’s and early 1990’s, the crowds of the Arab Spring formed on the Internet before hitting the streets – the first movement of its kind. The Arab Spring, following the lead of Iran’s Green Movement in 2009, ushered in the era of “iCrowds” – attracted, mobilised, and organised through social media.

But social media can also be used effectively to demobilise people, by reducing the chasm between the psychology and power of political leadership and that of the masses. The emerging political class must improve its understanding of iCrowd politics, and learn to harness the power of tools like Facebook, Twitter, YouTube, blogs, apps, and text messages.

For the Arab world’s new political elites, the lesson is clear: crowd dynamics cannot be ignored. When observed carefully, social media can be interpreted like clouds portending storms. If detected early enough, solutions can be found to diffuse tempestuous crowds before they inundate fragile new institutions.

5 A billion travelers this year (Dawn) A record 1 billion people will travel across an international border as a tourist in 2012, according to the World Travel & Tourism Council. That means that one in seven people on the planet will participate in world traveling this year, an activity that just a few decades ago was exclusively for the wealthy. The reasons for the upswing range from prosperity in developing countries like China to a perception of a more peaceful world. The London-based council calculates that the 1 billionth tourist will cross an international boundary on Dec. 13.

“This is an astounding milestone,” David Scowsill, president of the council, said. “There is an inexorable growth in the number of people who want to travel around the world.” While the US and France remain the two largest destinations for world travel, experts say much of the explosive growth in tourism has been to countries such as Guatemala, the Dominican Republic, and the Ivory Coast, which were off the world tourism map a decade ago. The top five destinations in the world are Paris, London, New York, Mediterranean resort Antalya, Turkey, and Singapore, the United Nations World Tourism Organization said.

While evidence of leisure travel can be traced to ancient Babylon, it began to grow swiftly after World War Two. For the US middle class, it became routine after airline deregulation began in the late 1970s when airlines were forced to compete on prices, said David Bojanic, a professor of tourism studies at the University of Texas San Antonio. The inflation-adjusted cost of a plane ticket from New York to London today is about one-fourth what it was in 1960, he said.

Several factors are responsible for the boom in world travel, including prosperity that has lifted tens of millions of people in Asia from poverty into the middle class, whetting their desire to use their new wealth to travel. The number of people traveling internationally from China, for instance, has jumped from 58 million in 2010 to 72 million this year, Scowsill said.