Merkel wins, allies crushed; When the American dream turns a burden; China manufacturing rebounds

1 Merkel wins, allies crushed (Straits Times) Chancellor Angela Merkel led her conservatives to a stunning victory in Germany’s election on Sunday, a personal triumph that cements her position as Europe’s most powerful leader. However, she will need to reach out to center-left rivals to form a new government after her coalition partner crashed out of Parliament. Ms Merkel’s Union bloc scored its best result in 23 years to put her on course for a third term, winning 41.5 percent of the vote and finishing only five seats short of an absolute majority in the lower house.

The 59-year-old benefited from a strong economy and low unemployment that have helped keep her personal popularity sky-high – a contrast with the string of leaders who have lost their jobs in other European countries since the continent’s debt crisis erupted three years ago. A new coalition probably won’t result in any major shifts in German policy, though it could bring a slightly softer tone to managing the crisis.

Ms Merkel, Germany’s chancellor since 2005, told supporters it was “a super result.” She wouldn’t immediately speculate about the shape of the next government, but made clear she plans to serve a full term.

2 When the American dream turns a burden (Gary Younge in The Guardian) Between 2007 and 2010 the median American family lost a generation of wealth, putting them on a par with where they were in 1992. Last week the census revealed that median household income is roughly the same as it was in 1988 and that the poverty rate had actually increased since 1973.

This is not for want of effort. American workers continue to make gains in productivity and American companies continue to reap the benefits. Last year corporate profits, as a share of the economy, were the highest since the second world war. The trouble is, none of the benefits went back to them. And while wages have stagnated and wealth has dissipated, costs have shot up. A family's health insurance contributions have increased 90% over the past decade.

With the budget battle and raising the debt limit looming, the narrative will once again be that America's deadlocked political culture is crippling its economy. For the root causes of this decline are not difficult to fathom. "One of the biggest drivers is deindustrialisation," explains James Meadway, senior economist at the New Economics Foundation. "Manufacturing used to provide good paying secure jobs for skilled workers in the west but much of that work has gone to emerging economies."

The self-proclaimed leader of the free world is turning into a low-wage economy with a class system more rigid than most and a middle class that wavers between poverty and precariousness. More than half the people using the food bank in Larimer County, Colorado, that I visited last year were working. In the absence of a living wage and an ethical pay structure, the work ethic, on which the American dream is founded, doesn't work.

http://www.theguardian.com/commentisfree/2013/sep/22/american-dream-wages-stagnate-delusional-myth

3 China manufacturing rebounds (BBC) China's manufacturing activity picked up speed in September, an initial survey by HSBC has shown, adding to signs of a rebound in its economy. The bank's Purchasing Managers' Index (PMI), a gauge of the sector's health, rose to 51.2 from 50.1 in August. A reading above 50 shows an expansion. This is the second month in a row the HSBC reading has been above that level.

Data released over the past few weeks showed that factory output, exports, retail sales and fixed asset investment all rose in August. China has relied heavily on its manufacturing and export sectors to drive its economic growth over the past decades. However, a slowdown in demand from key markets such as the US and Europe in recent times, hurt those sectors and its overall growth.

China's growth rate has slowed for two quarters in a row. Its economy expanded at an annual rate of 7.5% in the April to June quarter, down from 7.7% in the previous three months. Prompted by the slowdown in external demand, and amid calls from various economists and institutions to do so, China has been trying to boost domestic demand to help offset the decline in foreign sales and rebalance its economy.