1 US job
growth beats forecasts (BBC) The US economy added 321,000 jobs in November,
while the unemployment rate stayed at 5.8%, official Labor Department figures
show. The number of jobs created was well above analysts' forecasts of about
225,000 new jobs in the month. US employers have added at least 200,000 jobs
for 10 months in a row, the longest period of jobs growth since 1995.
The
number of jobs created has averaged 241,000 a month this year. But as in the
UK, stronger job creation has yet to lead to a significant increase in
salaries. Analysts said the US economy would continue to improve, despite lower
global growth expectations. The US economy is less dependent on exports than
Germany, China and Japan, but is more reliant on domestic consumer spending.
Most
recent figures suggest Americans are buying more cars, which is likely to keep
factories busy in coming months. Auto sales last month rose to their
second-fastest pace this year. Car sales are on track to rise 6% this year from
2013. The economy is expected to slow in the final three months of the year to
an annualised growth rate of 2.5%, down from 4.3% from April to September.
2‘Currency
wars bode ill for world economy’ (Nouriel Roubini in The Guardian) Central
banks in China, South Korea, Taiwan, Singapore, and Thailand, fearful of losing
competitiveness relative to Japan, are easing their own monetary policies – or
will soon ease more. The European Central Bank and the central banks of
Switzerland, Sweden, Norway, and a few Central European countries are likely to
embrace quantitative easing or use other unconventional policies to prevent
their currencies from appreciating.
The
cause of the latest currency turmoil is clear: in an environment of private and
public deleveraging from high debts, monetary policy has become the only
available tool to boost demand and growth. As fiscal austerity and asymmetric adjustment
have taken their toll on economic performance, monetary policy has borne the
burden of supporting faltering growth via weaker currencies and higher net
exports.
You can
lead a horse to liquidity, but you can’t make it drink. In a world where
private aggregate demand is weak and unconventional monetary policy eventually
becomes like pushing on a string, the case for slower fiscal consolidation and
productive public infrastructure spending is compelling.
Such
spending offers returns that are certainly higher than the low interest rates
that most advanced economies face today, and infrastructure needs are massive
in both advanced and emerging economies (with the exception of China, which has
overinvested in infrastructure). Moreover, public investment works on both the
demand and supply sides. It not only boosts aggregate demand directly; it also
expands potential output by increasing the stock of productivity-boosting
capital.
The
right policies – less fiscal austerity in the short run, more public investment
spending, and less reliance on monetary easing – are the opposite of those that
have been pursued by the world’s major economies. No wonder global growth keeps
on disappointing. In a sense, we are all Japanese now.
3
Disintegration of rural China (Joe Zhang in Straits Times/NYT) Many of China's
rural towns have been brought to ruins by the breakdown of traditional social
norms that followed decades of failed policies and neglect by the state. China's
traditional social fabric has become shredded - and the disintegration is most
obvious in the countryside, where families are falling apart, crime is soaring
and the environment is killing people. Many villagers who were happy to have
the state retreat from their private lives in recent decades are now crying for
government intervention. Something has to be done to rebuild China's languishing
village life.
Factories
eventually emerged in towns near rural villages, sucking the lakes dry and
poisoning the rivers and the air. Experts estimate China has more than 450
cancer villages, towns where cancer cases cluster at much higher than average
rates. Villagers have paid a steep price. Some residents of my village have
died of unknown ills in their 40s and 50s. Rural families are suffering. The
suicide rate in the countryside is three times as high as in the cities,
according to reports from 2011.
In many
cases, men go to jobs in the cities while their wives stay behind with the
children in the village. They get to see each other only a few days a year.
Distance, emotional stress and financial frustration tear families apart.
Beijing's
effort to decentralise the country's governance over the past few decades has
played a major role in this social decay. The elections of village heads are
often rigged and corruption is rampant. The retreat of the state has left a
dangerous power vacuum, and many villagers have been left to fend for
themselves. There is a lot of talk of mafia-like groups wielding power behind
the scenes.
The
misery in the Chinese countryside is severe but fixable. The government and the
public must come out from the shadows and prioritise the rebuilding of village
life. The state has the financial resources and expertise to do
something. It just needs the will.
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