As expected, central banks in London and Frankfurt left their lending rates intact Thursday in the midst of recession No. 2 for the continent.
The Bank of England and the European Central Bank both left their overnight bank-to-bank lending rates intact at 0.5 percent and 0.75 percent, respectively. Furthermore, the ECB cut its forecast for the eurozone economy to reflect a persistent recession for 2013. At this point, the ECB said, the 17-nations that share the euro as currency should see their economies slide 0.3 percent next year -- a drop from their prior prediction, which called for 0.5 percent growth.
That gives the United States another year of pointing to Europe as the reason why our hands are tied. How can Washington pull the economy here out of its lethargy if a key trading partner is not contributing as it should.
Principal excuses for 2013 coming out of Washington will be valid enough. The second most obvious failure in Washington for next year will be Republican stonewalling -- what some call outright obstructionism -- over any effort to push the economy forward.
On the flip side, whether Republicans have the audacity to claim the higher road or not -- after two wars and tax cuts, nice try -- the reluctance to add to the federal deficit is not such a bad idea.
It seems downright bizarre at this point to suggest turning the economy around without spending a dime to do so. Where are those corporate turnaround artists who rescued Apple, Chrysler and IBM among others?
Here, let's make it harder still. Corporations can lay off workers and do so as a major step in a turnaround. The government cannot quite do that. The government is the safety net. So, let's make the challenge harder: Put a turnaround together that cannot employ the favorite and most basic trick of corporate turnarounds. We can't fire the poor. They have to be included in the turnaround.
So, now we're doing this with one hand tied behind our back -- no fresh investment -- and then with the other hand tied behind our back, as well -- no laying off anybody; an all-inclusive turnaround or none at all. Those are the terms.
Any suggestions? Sure. Approach this from a trade perspective. The United States spends $600 billion in trade each year that it never sees return to support U.S. jobs. The economic stimulus package from 2009 was a $830 billion expenditure and that rescued millions of jobs -- but that program exhausted Washington's willingness to spend. Now even a simple fix-the-roads spending proposal is turned down on its merits -- on its merits, no less.
Fix trade -- how? The most obvious sore points are China and the oil exporting nations.
Speaking of oil, cheap oil is often seen as what put the United States on the map. Of course, it was rich soil and a rainy East Coast that incubated the country, but after that it was the presence of cheap hydropower, water mills grinding wheat and marrying Yankee ingenuity with free energy that put the United States into the modern age of industrialization.
History over: Cheap power.
Three: A turnaround artist would say hang onto what works. What works in the United States is agriculture. Simple enough.
Four: Rising medical costs. Fixing the insurance problem (Obamacare) was laudable. Now fix rising medical costs. That is a different kettle of fish and urgently necessary.
The United States needs to turn itself around with two hands tied behind its back and a major trading partner sidelined for the moment.
Any other suggestions? Write your representative soon.
In international markets Thursday, the Nikkei 225 index in Japan gained 0.81 percent, while the Shanghai composite index in China lost 0.13 percent. The Hang Seng index in Hong Kong was flat, off 0.09 percent, while the Sensex in India gained 0.49 percent.
The S&P/ASX 200 in Australia slipped 0.25 percent.
In midday trading in Europe, the FTSE 100 index in Britain climbed 0.17 percent, while the DAX 30 in Germany added 0.9 percent. The CAC 40 in France rose 0.15 percent, while the Stoxx Europe 600 gained 0.6 percent.
|Additional Analysis: Economic Outlook Stories|
TEL AVIV, Israel, May 17 (UPI) --Nobel Energy of Houston, which discovered Israel's big gas fields in the eastern Mediterranean, is pressing the government to decide soon on an energy export policy as the prospect of an undersea pipeline to Turkey gains credibility.