Friday, December 24, 2010

It wouldn't be Christmas without talk about...

...the economy. And, yes, that's what bothers me about Christmas -- the crass commercialism.

But I digress.

There are signs that the economy might indeed be moving in the right direction and with a strength that until quite recently might not have been noticed. As the New York Times notes:
Economists in universities and on Wall Street have raised their growth projections for next year. Retail sales, industrial production and factory orders are on the upswing, and new claims for unemployment benefits are trending downward.

Despite persistently high unemployment, consumer confidence is improving. Large corporations are reporting healthy profits, and the Dow Jones industrial average reached a two-year high this week.
That enthusiasm indeed has carried over to the stock market, as the Financial Times reports. It says: 
More money is pouring into equities than at any time in the past four years.
“We are now at the cusp of a change in expectations among investors, with asset allocators believing equities will return far more next year than credit or fixed income,” said Mislav Matejka, equity strategist at JPMorgan.
Adding to the good news is the belief that the Federal Reserve will not raise interest rates until at least 2012.

The apparent enthusiasm for the domestic economic figures are enhanced (or tempered, depending upon your opinion) by American and multinational corporations refusing to criticize China for its deliberate disregard for international trade laws. The New York Times reports:
So eager are multinationals for continued access to the world’s fastest-growing market that they are loath to cry foul even amid evidence that China may be flouting international trade laws.
That reticence has long characterized foreign companies’ dealings with the ascendant China. But last winter and spring, there were signs of a new willingness by American and European multinationals to speak out.
In the same story, the Times suggests what has changed:
China’s solid rebound from the global economic downturn, compared with continued malaise in the West, has made the Chinese economy look like a much better place for Western companies to pursue near-term opportunities — instead of fighting drawn-out trade and regulatory battles. It can take up to three years for a W.T.O. case to wend its way through a dispute resolution panel and any appeals.
In other words, when there is money to be made, criticism is not to be heard. That's not good enough for the Times' editorial board. This morning, it writes
China’s attempt to move up the tech ladder is natural. Many countries in history have pursued technological progress by first trying to piggyback on foreign inventions — tweaking and improving — before blazing their own trails. Still, intellectual property misappropriation cannot be a government policy goal, especially in a country the size of China, which can flood world markets with ill-begotten high-tech products.
The United States has made some progress at the World Trade Organization against the theft of intellectual property in China. But it must be much more vigilant and aggressive.
Good luck getting policymakers in Washington or corporate executives around the country to listen. They might, however, be more inclined to pay attention to fears that Japan could be in a deeper economic morass next year.

In short, the domestic economic situation is getting better, but that means it is where it was before the 2008 tank. And before you are quick to criticize one party or the other for causing the economic crisis, please remember that three decades of bipartisan support for free trade, low taxes and other curry favoring to business allowed for the problems.

No, I'm not criticizing capitalism; I am, however, bothered by the belief that necessary government oversight is excessive government interference. 

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