Well now the Arab world appears to have been upended, and whilst this may be a good thing from a democracy point of view, it spells a further protracted financial recovery. Global funds that might have been used for stimulus packages will now be redirected to provide the numerous forms of assistance that will be required, and/or deals that will be struck with the capitalist countries of the world. At the bottom end of all of this is of course the oil commodity, the most significant holdings of which lie within these very countries in turmoil.
Portugal has fallen to its knees and Spain is rumoured to be close to financial meltdown. In both these countries there is mounting pressure not to accept bail-out funding. The reason for this is simple: along with bail-out funding comes austerity measures as a condition of same, and that means social program cutbacks that affect the majority of the population. Quite a chicken-and-an-egg conundrum.
On an almost farcical note, Moody's have again downgraded Greece's credit rating to below that of junk bond status, much to the ire of the Greek politicians of course. However this is an indication that Greece may not be able to settle bail-out loan finance instalments. Internally Greece continues to face financial ruin with citizens refusing to accept mandatory social spending cuts, and politicians having to trade off with the IMF et al. Again here is more non-revenue that will not be directed into stimulus packages.
The GDP legs of consumer spending, business investment spending, and goverment spending are all crippled in these european countries. The final leg of currency depreciation to lift exports is now also out of their hands due to the common currency of, and the overall need to support, the Euro. Good idea or not?
Domestically, we read that we created +- 157,000 new jobs in the final quarter of 2010, then we read that of this "wonderful" figure +- 145,000 were public sector jobs. We read that February new vehicle sales were up YOY - now I ask you, are we suddenly all morons? The new public sector employees more than likely, were the primary reasons for the new vehicle sales in the first part of the year, therefore all this "new job and car sales" were in fact tax payers money eminating from an ever shrinking tax revenue base. Statistics are a wonderful thing, that in the absence of further analysis are mostly meaningless.
We are now displaying desperate "signals" to create a "recovery" environment and yet unemployment continues unabated.
Thank goodness for the Cricket World Cup, which excitement is, as with the SWC, lifting our gloomy mood. Later this year we have the Rugby World Cup, maybe after that we can get back to work?
