As a child my mother would lure me home from the playground with the promise of a "Double Dip." Now the mere mention of those two words is enough to send me running fast in the other direction.
The term, once synonymous here in the UK with a tasty sherbet sweet, is now a household name for the bitter pill some of the world’s richest economies may soon have to swallow as investors become increasingly concerned about a return to recession.
So what are the chances of a contraction?
Bank of America Merrill Lynch economist Michelle Meyer argued this week that the U.S. is just "one shock" away from seeing its economy shrink.
Investors got a shock of a different nature on Friday with word that the world’s largest economy created more jobs than expected. Markets rallied for about an hour before giving up their losses, a phenomenon often referred to as the "dead cat" bounce.
Despite the buoyant jobs numbers economists like Meyer are becoming increasingly concerned that the signs on the upside are not frequent or significant enough to rule out a contraction later on in the year for the U.S., especially as biting inflation eventually pushes the hand of rate setters at the Federal Reserve.
True, U.S. gross domestic product did increase 1.3% in the second quarter but that was much weaker than anticipated.
The previous quarter’s growth was also sharply revised downwards: from a robust 1.9% to just 0.4%.
And when America sneezes, the rest of the world catches a cold.
If there’s one thing that has me more worried than an anaemic recovery state side, it is the bleak future of the euro zone.
Some 17 countries share the euro as their common currency and through thick and thin (thus far) their leaders have vowed to defend it. The money is used by more than 300 million people and prices more than a quarter of world trade.
But the political will is waning, the bills are mounting and cracks are appearing between those countries setting the economic pace in Europe and those who simply can’t keep up.
The world’s bond markets are worth an estimated $80 trillion, a large portion of which is made up of borrowings issued by euro zone sovereign nations.
Fighting a battle on that scale is expensive, especially when you don’t all see eye to eye.
The French president Nicolas Sarkozy and German chancellor Angela Merkel will late on Friday urgently discuss their options this weekend, presumably from their holiday retreats.
This has left EU Economic Affairs Commissioner Olli Rehn holding "the reins" and even he acknowledges that the euro area must match its political cohesion with equally homogeneous and tough fiscal rules.
Mind you, that’s easier said than done when your cultures are different, your populations are of different ages and crucially, your growth rates are going in the opposite direction.
In 2008, we had a credit crunch, when banks wouldn’t lend to individuals. Now we are seeing a debt crunch when entire countries find it hard to borrow.
It’s hard to say which one is worse. Still, what is becoming clearer is that even if we do avoid a double dip, the gap between economic indicators and expectations is growing and that is why the markets are losing confidence.
Olli Rehn, European Commissioner for economic and monetary affairs, Friday said financial markets had not reacted as expected to measures taken by Europe’s leaders to stem the eurozone's economic crisis.
He said the tensions were not justified by economic and budgetary fundamentals of the bloc. Further, the political will to defend the euro should not be underestimated. Euro leaders, he said, had proven they could take decisions and respond to an evolving situation.
Highlights from his speech follow:
On the 21 July agreement by European leaders, in which Greece got improved financing conditions and the Europe’s bail-out funds were given more flexibility to alleviate market pressures, Rehn said:
“We are doing what is necessary to implement the agreement fully and as rapidly as possible. Of course it would have been fantastic if the agreement had been fully operational as of 22nd of July but this was of course impossible. The very technical details of the agreement must be fleshed out and then accepted and ratified in each member state.”
The process was a “necessary and legitimate price to pay for living in democracies,” he said, with experts from his department, euro member states, the European Central Bank and the EFSF – Europe’s bail-out mechanism — “working night and day to put flesh on the bones of the 21st July agreement.”
Rehn said the process should take weeks, rather than months, and “in order to end uncertainly the processes should be finalized by early September.”
Rehn said the technical and political processes were mutually dependent. “There are different procedures for ratification across Europe and we expect all member states to do what is expected of them to meet that timeline and implement the decisions that they have themselves taken.”
On Greece, the first eurozone country to take a bail-out from the IMF and one which has been at the epicenter of the crisis, Rehn said:
“Heightened concerns around Greece are in our view not warranted. Investors seem unconvinced that Greek public debt will be put on sustainable track. I say that this is not the right conclusion.
"[The] 21 July agreement did deliver major improvements in terms and conditions for financing Greek public debt. There will be a significant extension of average maturity of all loans and a lowering of interest rates on official loans.”
Johannesburg, South Africa (CNN) In the roadside markets of central Johannesburg, alongside neat piles of fresh vegetables and Chinese-made wigs, hawkers sell self-help books.
The book titles are long-winded and have the author’s photo enlarged on the cover - a style that seems popular in the United States. In fact, most of the books are aimed at the American businessperson and seem incongruous sitting in a Southern African roadside stall.
The Americans have pioneered that genre of literature that aims to “help.” Some books take a religious tone and others are more business-focused. Some of these manuals are self-righteous, some are plain boring; most are worthy and the authors have a genuine desire to help others “make decisions,” live “in the moment” or find their “passion.”
What “life lessons” can, for example, an immigrant Zimbabwean living in Johannesburg learn from a salesman in Idaho? Well, a lot apparently.
The common denominator in much self-help literature is the underlying need to triumph over adversity or to improve oneself. The universality of that instinct translates across cultural or geographic differences.
Personally, I like to just get on with things. Professionally, as a journalist, I am always open to hearing stories about how people change their lives or make a difference. I avoid the self-help books but over the years, I have interviewed business leaders, self-help gurus, management experts and many others who offer their solutions to dealing with life, money and business.
For me, the simplest arguments make the most sense. There is a whole industry and tone of language devoted to the self-improvement business but once all the waffle is taken away, it’s the obvious advice that is the most valuable.
Take, for example, the recently re-released book “The Surfer’s Code,” written by South African surf legend Shaun Tomson. I interviewed him recently and his lessons or “codes” made sense, even though I am a useless surfer and average swimmer.
Some of his offerings include, “I will always paddle back out,” and “There will always be another wave.” These will be familiar to many parents who constantly remind their children to keep trying harder and never give up.
The old adage that one should pick one’s fights is reworked as “I will never fight a rip tide.” Sensible stuff.
“I will watch out for other surfers” has shades of good neighborliness and the 10 Commandments.
It is a gentle book about dealing with tragedies and challenges. Like all self-help books there is nothing new in it and that’s the point. Tomson’s message is that everyone faces difficulties and sadness in their life; the big challenge is how to deal with it.
As the global economic situation seems to look bleaker and bleaker, from the United States to Europe to East Africa people are realizing that future opportunities might get lesser.
So, many more will look for comfort and advice in the pick-me-up manuals that are flogged in the bookshops of fluorescent shopping malls of the industrialized nations as well as on the brightly sunlit stalls of the developing world.
The messages will offer succor and try to sustain populations of people around the globe who are all sharing experiences that are familiar: how to make money and be happy.
It’s as simple as that.
As global markets head south again, questions are being asked about the whereabouts of Europe’s policymakers.
German Chancellor Angela Merkel is on a hiking holiday in Italy, French President Nicolas Sarkozy is on a three-week holiday in the French Riviera, Italian Prime Minister Silvio Berlusconi is heading for his villa outside Milan, and UK Prime Minister David Cameron is keeping a low profile on holiday in Tuscany, according to The Times.
Those who cut vacations short include EU Economic and Monetary Affairs Commissioner Olli Rehn, who is heading back to Brussels, and Spain’s Prime Minister Zapatero who rushed back to Madrid on Thursday, and Portuguese Prime Minister Pedro Passos Coelho.
Kathyrn Hopkins, writing in The Times, says: “Evidence of political paralysis has dogged the crisis from the beginning and with many eurozone leaders enjoying their summer holidays, the markets have become increasingly nervous that the situation will worsen.”
What do you think - should Europe’s leaders cut short their holidays? Can politicians do anything to stop the contagion anyway, or would their return further spook the markets and make matters worse?
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