A report on Transatlantic Trends surveying attitudes in the European Union, Turkey and the U.S. show a stark contrast in attitudes on the rising economic and political might of China and India.
The report, sponsored by the German Marshall Fund in the U.S., interviewed 11,000 people in the U.S., Turkey and 11 EU nations. Respondents in the EU were particularly despondent when it came to the euro, which took a beating with sovereign debt problems earlier this year.
“There was little support for Europe’s common currency in the countries surveyed that use the euro,” the report authors said. “When asked whether using the euro has been a good or bad thing for their country’s economy, almost all majorities in the eurozone sample responded negatively.
“The euro was not appealing from the outside either. Majorities of the British (83%) and Polish (53%), and a plurality of Bulgarians (42%), thought that using the euro would be a bad thing for their economies. However, more than half of the EU respondents (57%) felt that economic difficulties in Europe should lead to greater commitment to build a stronger European Union.”
But particularly interesting was the wide gulf in attitudes across the Atlantic about Asia. Authors of the report write:
“EU and U.S. respondents were divided about the role Asia would play in global affairs. Seven-in-ten respondents (71%) in America found it very likely that China will exert strong leadership in the future, while only a third of Europeans (34%) thought the same scenario is very likely. Nevertheless, EU respondents (31%) were somewhat more likely than Americans (21%) to describe their relations with China as good.
“When asked about India, the majority of EU respondents (54%) thought it was unlikely that the world’s most populous democracy will exert strong leadership in world affairs five years from now, while 74% of Americans believed that India was likely to play a leading role.”
Half of U.S. respondents said they had enough common values with China that cooperation on international issues was likely. Two-thirds of Europeans, however, said their values are so different international cooperation with China was less likely.
All of which raises a question – why these divergent views on Asia between the EU and the U.S.?
The strike that crippled South Africa’s hospitals and schools is no longer in the headlines, but it’s not over yet.
The public servants strike was suspended after three weeks of teachers, nurses and hospital workers staying away from work.
There is no resolution yet to the pay dispute, just a limbo of uncertainties as unions say they are working out a draft wage agreement with the government.
The unions say they have won a victory because the government failed to crush the strike, but in reality the biggest losers were the striking workers, say economists.
Although South Africans have a constitutional right to strike, they do so with a no work, no pay caveat, so after nearly 20 days on the picket line many of the strikers were much worse off financially than they were before the strike.
Economists calculate that striking teachers and nurses have lost about 5% of their annual salary.
Do you think it was worth it?
By Ayesha Durgahee
Starting at around $600 for ballerina flats, you have to be a serious shoe fiend or have serious amounts of money to slip into a pair of Manolos – especially when they go up to more than $1500.
The number of women that queued to get into the new Manolo Blahnik pop-up store at Liberty of London gave the impression they were giving the shoes away!
For these 200 women, Liberty of London became their Manolo Mecca because the designer himself was inside to meet them and sign whatever was given to him – Blahnik silk scarves, diaries, men's ties, books and of course shoes.
I had never met Manolo Blahnik before so I didn't know what to expect. Dressed in a bright purple suit with purple leather suede loafers to match, he greeted me with a smile as he threw his arms up and said 'so lovely to meet you!'.
With arms akimbo, Manolo gave a candid interview with vivacious modesty...a bit like his shoes. Having a snapshot of the designer's personality, it is, in this case, the man that maketh the Manolos.
On Wednesday, when the Japanese yen hit 82 per U.S. dollar, the government of Prime Minister Naota Kan made good on weeks of threats and ordered the Bank of Japan to begin selling yen to counteract its steep rise.
Meanwhile, concern in Washington about how weak the yuan is trading against the U.S. dollar is threatening to boil over again as U.S. Congressional midterm elections near. Beijing loosened the tight peg of its currency to the U.S. dollar in June by allowing the yuan to appreciate. However, the currency has only increased one percent in that time
So what’s the difference between Japan’s “intervention” and accusations against China about currency “manipulation”?
In the broadest terms, nothing.
Central banks act to stop a currency’s increase or decrease in value through the laws of supply and demand. Japan’s bid to decrease the value of the yen is muscled by the government selling yen – forcing down the price of the yen, because there’s more yen available. Tokyo hopes that will keep currency speculators from driving the yen even higher.
Sometimes governments work together to help one nation’s currency, such as in 1998 when the U.S. and Japan worked together to buy $4 billion worth of yen to prop up the currency, which was trading at 140 against the dollar as the Asian Financial Crisis raged. There’s little chance in Japan’s current yen dilemma that any foreign governments in Europe or North America will come to the country’s aid.
Meanwhile, the rhetoric from U.S. politicians is on the rise as critics there argue that the yuan is undervalued by more than 30 percent - meaning Beijing is pumping the market with yuan to keep its value low.
So the difference between “intervention” and “manipulation,” in economic terms, is just plain semantics. The politics of the terminology, however, is an entirely different matter.
At Schloss Elmau, Germany, one of the most picturesque corners of Europe a discreet but high level group of global executives expressed concern about the state of play in the West, but offered their relentless enthusiasm for the expansion in the East from the Middle East to Far East Asia.
Schloss Elmau is a castle, transformed into a luxury resort in a Bavarian village near the border of Austria. Austria’s former Chancellor Wolfgang Schussel urged 125 mainly European business executives “not to panic.” “Look at the real figures. We should be rational about a post-crisis environment,” Schussel said. German industry can leverage its famed engineering prowess to expand market share in green technologies and high-end manufacturing.
While not an outright panic, executives did express ongoing concerns for the medium term. In a poll conducted at the Stern Stewart Institute annual gathering, they predicted growth of only 1.9 percent in Europe and the U.S. for the next five years. The world they all agreed would be propped up by the East, with China sustaining baseline growth of 7.5 percent in the same time frame.
The former chief executive of German retailing giant Metro, Hans-Joachim Korber said we all need to recognise the shift of both economic and political power to the East. He made his first move into China two decades ago spending two full weeks on a tour from the top to the bottom of the vast land.
The demographics support Korber's position, one that is echoed by scores of others. Mumtaz Khan, chief executive of a Singapore-based investment group talked of “fundamental change” driven by population growth and the desire by governments, companies and citizens to boost the wealth of their nations and per-capita incomes. They shared figures indicating that China, India and Indonesia will be home to more than 3.3 billion people by 2050 from roughly 2.6 billion today.
The Middle East region is in the mix of countries with fast growing populations and intense spending plans by governments to build out infrastructure. Saudi Arabia and Abu Dhabi have earmarked $700 billion over the next five years for such activity. This by the way matches efforts by China, which has a current population of 1.2 billion - four times the size of the entire Middle East.
Marios Maratheftis the Dubai-based economist for Standard Chartered Bank told the gathering that governments in the Gulf States are quickly re-directing their spending away from real-estate projects after the 2008-09 crises. “Human capital tends to be neglected,” said Maratheftis pointing to the property sector in the UAE, which made up 70 percent of all activity in the pre-crash environment. Leaders in the region have recognised the need to speed up job creation and per-capita income for a wider swath of their populations. Recent unrest in Bahrain by the Shiite majority only served to underscore his points.
Beyond their concerns about sluggish domestic growth, they listed the threat of conflict in Iran as the number one risk to global security and the global economy, with surging energy prices due to high demand in the East straining supplies over the medium term.
During a plenary session on the link between economic and military power, the highly respected former ambassador for Germany in the U.S. and UK, Wolfgang Ischinger, did not hold out a great deal of hope for the latest round of Middle East peace talks. He and said we should look for innovations beyond the current framework. He said this strategy should be built around a regional security pact initiated by Washington and supported by others.
Such a pact would remove the long-standing risk premium put on the region by investors and give these executives yet one more reason to be bullish on the East.
If you're unclear about the new banking reforms on increased capital reserves, Richard Quest has a clever explanation using Jenga! All you need is one minute thirty seconds to watch this video. Do you think banks increasing capital reserves will help or hinder the economic recovery? Leave us your thoughts in the comments section (right below here), become a fan on Facebook or Tweet Richard your thoughts to @RichardQuest. Be clever and we just might use your response in the show!
A towering national debt, a revolving door of prime ministers and an export-driven economy limping slowly from its worst economic slump since World War II – Japan’s got it bad.
So why is the yen trading at 15-year record highs?
A number of factors have combined to pump the yen up to 83.36 per dollar on Tuesday, the highest since May 1995.
First, to set the scene: In June 2007, the yen was trading at 122.64 against the U.S. dollar – its highest level in five years. Then the U.S. subprime loan market imploded. Japanese who invested in other currencies with higher yields – known as “carry trades” – brought that cash back home as other currencies, particularly the dollar, was hit by the crisis.
The yen’s natural strength lies in the country’s trade surplus. Cars, electronic goods and other Japanese products sold abroad brings a healthy stream of yen back home. Add to that the influx of cash investors brought back to Japan as the global economy crashed, and the yen continued to strengthen.
Another factor: Countries and investors diversifying away from the dollar in the wake of the crisis were looking for a safe investment, and the yen was a popular choice. Most notably, Beijing has been snatching up a record number of Japanese government bonds instead of U.S. ones.
“That to me explains largely what is happening to the yen in the face of what is reasonably dark economic news and a difficult political situation,” said Benjamin Pedley, head of investment strategy in North Asia for HSBC Private Bank.
And that adds to the difficulties for Japan’s recovery – a strong yen cuts the profits of its products abroad.
The markets are waiting to see if the saber rattling among Japanese politicians on the skyrocketing yen will turn into a government intervention to lower the value of the currency. The government hasn’t taken such steps since 2004.
But Pedley doubts any intervention by the government will have any long-term effect on the strength of the yen. Trading partners in Europe and North America, on balance, would prefer a stronger yen. “The problem is, any intervention would be unilateral – they won’t have any cooperation,” Pedley said.
With the re-election of Naoto Kan as head of his party - and as Japanese prime minister - the markets are betting that the yen will remain high. The Tokyo markets closed before the vote, but hit a fresh 15-year high on the belief that Kan would survive the internal challenge from Ichiro Ozawa, who favored a strong intervention in the markets.
Every year, companies spend billions of dollars on good causes. But in this challenging economy, corporate giving is taking on a new level of importance.
"Cause Marketing" is a term coined in the 1980s. But today, it's becoming a popular method for companies to get through tough times, and build their brands.
We are accustomed to big companies like Pepsi and Nike getting behind global causes, but smaller businesses can get in on the action as well.
I profiled a small company, Guy Harvey Inc., that reports record revenues in 2008/2009, at the height of the recession, and management credits Cause Marketing with the success.
A pioneer in this field, Harvey says the cause started as an authentic desire to save the world’s oceans, and became a business strategy much later on.
"Sometimes you need to have money to do the good," says Harvey, "and I feel good to be in this position now, to have the influence to really make a difference."
Carol Cone, an expert on marketing and the author of "Breakthrough Nonprofit Branding" says companies spent more than $9 billion in 2001 on charitable causes. The challenge, she says, his ensuring they meet their business objectives at the same time.
According to Cone, recent surveys show six out of 10 consumers say they are more loyal to a company that backs a cause. Social media is an important factor in the success of cause marketing. Cone says, "By word of mouth and social media, consumers can find out what a company truly stands for. Consumers want to be in control, they want to feel empowered to be good, so this really resonates."
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.