Britain is facing return of three-day week

Shorter hours would be preferable to mass unemployment, say government sources

By Jane Merrick, Brian Brady and Cole Moreton
Sunday, 25 January 2009

The prospect of the three-day week returned to haunt Britain yesterday as it emerged that ministers are considering paying firms to cut hours in order to survive the recession.

Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat. But as the country comes to terms with the reality of a recession, it emerged that the Government is looking at compensating employees, through their firms – thereby drawing comparisons with the shutdowns of the 1970s.

While the move would safeguard jobs, it would mean that the financial crisis is on a much larger scale, further undermining confidence in the economy with the suggestion of Britain grinding to a halt.

Major firms such as JCB have already downed tools for one day a week and are considering moving to a three-day week, with state help, if the recession gets worse. The firm's chief executive, Matthew Taylor, said that he is pressing Lord Mandelson, the Secretary of State for Business, to introduce compensation for workers if their hours are reduced. Some of the jobs earmarked for redundancy, he said, could be saved if the move is introduced by April.

Ministerial sources insisted last night that a scheme to help compensate workers was "not imminent" but said it was an option being discussed. It would match measures introduced by the German government.

The Thatcher government brought in a short-time working directive in the 1980s to cover earnings lost through shorter hours. Such a move would cost the Government millions of pounds, but would be cheaper than the huge rise in unemployment benefit claims as a result of job losses.

Yet the move would stir bad memories of the three-day week of the early 1970s, when the Heath government imposed a cut in hours to save electricity as a result of industrial action.

Advice on how to ride the downturn published on the Department for Business website tells firms that cutting hours is one way to reduce overheads and ride the economic storm. The guide, Real Help for Businesses Now, suggests firms could cut staff costs by reducing hours, rather than by making redundancies. "Cutting overheads such as property costs ... will take much longer to have an effect on the balance sheet," it said. "You can also cut staff costs by restricting overtime or cutting staff hours. You could also consider reducing your number of employees – though redundancy payments will increase costs in the short term. However, the consequences of redundancies can be devastating, particularly for small businesses, and morale could suffer."

Experts fear that the recession could be the worst for 60 years. Figures released on Friday showed that the economy is contracting faster than at any time since 1980. Kenneth Clarke, the new shadow Secretary of State for Business, last night accused Gordon Brown and Alistair Darling of "panicking" over the recession. Ministers were treating voters "like fools" by claiming they could see the "green shoots" of recovery, Mr Clarke wrote in the News of the World.

Figures from the British Chambers of Commerce, which represent 100,000 firms, show that 39 per cent of businesses are planning to cut hours.

Many firms in the car industry have introduced or are considering a three-day week, such as Bentley Motors in Crewe and Nissan in Sunderland. But the practice is spreading to the rest of the manufacturing sector, and business leaders fear it is only a matter of time before other industries resort to the measure.

Mr Taylor, of JCB, said: "We would rather go to a shorter working week than lay people off."

Three-day weeks have been backed by the unions, whose members are happier to take pay cuts than lose their entire salary and pension benefits.

Government sources said there were issues about whether to restrict compensation to the car industry or apply it to all firms.

The CBI refused to comment last night, but a source said some firms would be able to reduce output to three days more easily than others.

When the three-day week crippled Britain

The three-day week carries a particular resonance for anyone who remembers the 1970s, as it recalls a time when firms were forced into short-time working, redundancies, and lay-offs.

As now, the crisis erupted amid an economic emergency. But the cause of a problem that crippled the nation's infrastructure was not a financial calamity but a breakdown in industrial relations.

Britain's miners walked out on 9 January 1972 – their first strike in 50 years – over the failure to meet their demand for £9 on top of an average weekly wage of £25. The impact of closing all 289 pits in England and Wales – and pickets at power stations – was dramatic.

A month later, the Prime Minister, Edward Heath, declared a state of emergency and, with dwindling electricity supplies forcing factories to close, he imposed a three-day week. A week into the state of emergency, it was announced that electricity would be switched off on a rota basis between 7am and midnight every day.

By the middle of February, it was estimated 1.2 million people had been laid off. Imperial Chemical Industries (ICI) gave a week's notice to its 60,000 weekly paid staff as a precautionary measure.

Although the crisis ended with a pay deal on 19 February, the miners repeated their industrial action less than two years later, provoking another three-day week and, ultimately, the removal of the Heath government in February 1974.

http://www.independent.co.uk/news/uk/politics/britain-is-facing-return-of-threeday-week-1515307.html

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

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Depression *alert*

Posted by Tracy Alloway on Jan 27 15:39.

Well, it’s finally happened - a mainstream investment bank calling not just a recession, but a depression. How depressing.

In a note entitled “Some inconvenient truths”,  Merrill Lynch’s North American economist David Rosenberg elucidates (emphasis ours):

It shouldn’t come as any big surprise that with such a provocative title, we would be saddled with questions as to how an economic depression is even defined. Of course, most portfolio managers still don’t know that a recession is not defined as back-to-back quarters of negative real GDP prints (which we had neither in 2002 nor 2008) but instead the timing of the peaks in real sales activity, employment, industrial production and organic personal income growth.

As for depressions, there is no official definition, except to say that they have existed in the past. There were no fewer than four in the nineteenth century, one in the twentieth century, and we are very likely enduring another one today. Though this current one is muted by the fact that most countries have an elaborate social safety net (deposit insurance, unemployment benefits, welfare, and socialized health care).

Depressions are basically long recessions - they can last anywhere from three to seven years, while historically cyclical recessions last 18 months - and tend to follow years of leveraged prosperity of Gatsby-like proportions. Considering that in this most recent leveraged cycle from 2002-07, we reached a point where a record 40% of corporate profits were derived from financial activities, where household debt relative to income and assets surged to unprecedented levels and the personal savings rate briefly went negative at the height of the housing bubble, it is safe to say the down-cycle we are currently experiencing did indeed follow a classic elongated period of leveraged prosperity. It is now reverting to the mean.

And with regards to reverting to the mean, Rosenberg provides some rather scary numbers:

• $6 trillion - The amount of private sector debt that needs to be eliminated (Based on ML data that total private sector credit market debt relative to national income is still near a record-high of 140 per cent vs a long-run norm of 80 per cent).

• $1 trillion - The amount of excess capacity in the US economy.

• $13 trillion - the cumulative loss of household net worth at the end of 2008.

• 70% - The US’s share of global consumer spending/GDP, which Rosenberg predicts will now revert to its long-run average of 64 per cent.

And the scariest bit of all:

As Morgan Freeman (Red) put it so eloquently in The Shawshank Redemption, “that’s all it takes, really, pressure, and time.” Time is certainly going to be a big part of the solution, and history tells us that deleveraging cycles last years. While the pendulum is obviously on the downswing, the forecasting community is obsessed with locating the bottom. In our view the appropriate focus is to assess just how far the pendulum will swing in the opposite direction, because a mean-reversion process actually breaks through the mean.

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

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Peter Schiff: Oh, he saw it coming

'Dr. Doom' became a star by predicting last year's market meltdown. And now his 2009 forecast is even scarier.

Schiff did not invest for doom; he invested for a bull market that did not exist. He was wrong where it mattered most, protecting client assets. For this amazing feat, people think of him as a star.

An Actual Schiff Portfolio

The above statement is from a person who claims to have additional portfolios invested with Schiff over the past 2 years. In total (not just this portfolio), my contact says he invested $70,000 and is now down to $27,000. That is a loss of 61%.

I have talked with another person who claims to be down 72%, and many others who claim 40% or more.

Schiff's entire invest thesis seems to boil down to "Buy and hold foreign stocks, foreign currencies, and commodities, come hell or high water, and hold on to them." Hell has arrived for those following Peter Schiff's philosophy.

Schiff's Overall Thesis

• US Equity Markets Will Crash.
• US Dollar Will Go To Zero (Hyperinflation).
• Decoupling (The rest of the world would be immune to a US slowdown.
• Buy foreign equities and commodities and hold them with no exit strategy.

Schiff was correct about point number 1 above. The US equity markets crashed. That was a very good call. Unfortunately, his investment thesis centered on shorting the dollar in a hyperinflation bet, and buying foreign equities rather than shorting US equities.

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

This e-mail and any attachments may contain confidential and/or privileged information and is intended solely for the addressee. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. This e-mail may not necessarily reflect the official viewpoint of the company.

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Watch the Baltic Dry Index in 2009

In 2009 investors will be scanning the globe for signs of economic recovery or deterioration. Among the many tools they should be watching in order to gauge the strength of global trade is the Baltic Dry Index (BDI.) The Baltic Dry Index measures shipping rates for dry bulk carriers that carry commodities such as coal, iron and other ores, cocoa, grains, phosphates, fertilizers, animal feeds, etc. In short, the BDI is an excellent proxy for global trade.

In the chart below, note how the BDI peaked after the S&P 500 index did in 2007 and bottomed after the SPX last month. The BDI may not be a leading indicator, but it is an important way to confirm whether moves in global equities are being reflected in an increase in global shipping. If the BDI fails to rally in 2009, be skeptical of any rally in stocks.

For those who are interested in following stocks of some of the leading dry bulk carriers, a good place to start is with Diana Shipping (DSX), DryShips (DRYS), and Excel Maritime Carriers (EXM).

[source: StockCharts]

http://vixandmore.blogspot.com/2008/12/watch-baltic-dry-index-in-2009.html

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

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GE Profit Drops 43% as Immelt Backs Dividend, AAA Rating: Audio

Jan. 23 (Bloomberg) -- General Electric Co. posted fourth-quarter profit in line with analysts' estimates as Chief Executive Officer Jeffrey Immelt repeated the company has the resources to pay the shareholder dividend and support its AAA credit rating.

Profit from continuing operations declined 43 percent to $3.87 billion, or 36 cents a share, as the global credit crisis eroded income at the finance segment. Per-share profit before the payment of preferred dividends related to a stake owned by Warren Buffett's Berkshire Hathaway Inc. was 37 cents, meeting analysts' estimates. (Source: Bloomberg)

http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=GE%3AUS&sid=abFblOhTxqYw

It's Time for GE to Lose its Triple-A

from Portfolio.com: Market Movers by Felix Salmon

GE's triple-A credit rating is so important, especially now that it has been threatened by S&P, that it has overshadowed the company's earnings this morning. But really it's high time that GE lost the rating, which is a throwback to the pre-crisis era. Why?

1. The slogan is familiar by now: any company reliant on its triple-A rating shouldn't have one. GE should by rights be a large industrial company, but over the years, thanks to that rating, GE Capital -- essentially an in-house SIV -- became a monster which grew to a point where it drives the company's earnings and success. It became so big, in fact, that it needed its very own Fed bailout. This is not healthy.
2. Triple-A means risk-free, and GE isn't that, as one look at its spreads will indicate: five-year GE bonds are trading at 326bp over Treasuries, which, as Eric Falkenstein says, is "a spread that most junk bonds had in 2006". And if we've learned one thing over the course of this crisis, it's that when a triple-A company sees spreads at that kind of level, it won't keep that rating for long.
3. If it wasn't for the Fed stepping in to save the day, GE would have had a massive liquidity crunch already, simply incapable of rolling over its whopping $515 billion in liabilities. In other words, a large part of the triple-A is simply the moral hazard of GE being too big to fail -- and since that's the case, the government should by rights be getting paid for its de facto backstop. Instead, the shareholders are receiving $13.4 billion a year.
4. GE's creditors can no longer take solace in the fact that if push came to shove, GE could borrow against its assets in order to pay them off when their debts come due. GE's unsecured debt is trading at high spreads, but there's no indication that GE's secured borrowing costs are any lower. After all, who has a long-term cost of funds low enough to make money lending to GE at low secured rates?
5. Since it's not a bank, GE has made zero efforts to mark those assets to market. There's no doubt they've fallen a lot in value, but your guess is as good as mine when it comes to how much they've fallen in value. It's probably not enough -- yet -- to wipe out GE's equity, but it might well be enough to make that equity cushion so thin that a triple-A rating is no longer warranted.

The fact that GE reckons it can still pay a $13 billion dividend and be profitable is indication that it's a relatively safe company, at least unless or until investors start trying to mark its assets to market. Now it's not clear why they should do that, since those assets were always being held to maturity, and there's no reason why GE should ever want to sell them off. But on the other hand, there's also no reason why shareholders should consider those assets to really be worth par -- which is what GE is reporting.

In any case, no company with half a trillion dollars of liabilities can sensibly have a triple-A rating in this market: GE is simply too leveraged to justify such a thing. Which is maybe why, at $12.55 a share, the stock is at its lowest level since 1996.

http://www.portfolio.com/views/blogs/market-movers/2009/01/23/its-time-for-ge-to-lose-its-triple-a?tid=true

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

This e-mail and any attachments may contain confidential and/or privileged information and is intended solely for the addressee. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. This e-mail may not necessarily reflect the official viewpoint of the company.

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PBS Interview with Warren Buffett

via Calculated Risk by CalculatedRisk on 1/22/09

Here is a partial transcript from Susie Gharib’s interview with Warren Buffett airing tonight on Nightly Business Report. You can check your local listings here

SUSIE GHARIB, ANCHOR, NIGHTLY BUSINESS REPORT: Are we overly optimistic about what President Obama can do?

WARREN BUFFETT, CHAIRMAN, BERKSHIRE HATHAWAY: Well I think if you think that he can turn things around in a month or three months or six months and there’s going to be some magical transformation since he took office on the 20th that can’t happen and wouldn’t happen. So you don’t want to get into Superman-type expectations. On the other hand, I don’t think there’s anybody better than you could have had; have in the presidency than Barack Obama at this time. He understands economics. He’s a very smart guy. He’s a cool rational-type thinker. He will work with the right kind of people. So you’ve got the right person in the operating room, but it doesn’t mean the patient is going to leave the hospital tomorrow.
...
SG: But I know that during the election that you were one of his economic advisors, what were you telling him?

WB: I was telling him business was going to be awful during the election period and that we were coming up in November to a terrible economic scene which would be even worse probably when he got inaugurated. So far I’ve been either lucky or right on that. But he’s got the right ideas. He believes in the same things I believe in. America ’s best days are ahead and that we’ve got a great economic machine, its sputtering now. And he believes there could be a more equitable job done in distributing the rewards of this great machine. But he doesn’t need my advice on anything.
...
SG: What’s the most important thing you think he needs to fix?

WB: Well the most important thing to fix right now is the economy. We have a business slowdown particularly after October 1st it was sort of on a glide path downward up til roughly October 1st and then it went into a real nosedive. In fact in September I said we were in an economic Pearl Harbor and I’ve never used that phrase before. So he really has a tough economic situation and that’s his number one job. Now his number one job always is to keep America safe that goes without saying.

SG: But when you look at the economy, what do you think is the most important thing he needs to fix in the economy?

WB: Well we’ve had to get the credit system partially fixed in order for the economy to have a chance of starting to turn around. But there’s no magic bullet on this. They’re going to throw everything from the government they can in. As I said, the Treasury is going all in, the Fed and they have to and that isn’t necessarily going to produce anything dramatic in the short term at all. Over time the American economy is going to work fine.

SG: There is considerable debate as you know about whether President Obama is taking the right steps so we don’t get in this kind of economic mess again, where do you stand on that debate?

WB: Well I don’t think the worry right now should be about the next one, the worry should be about the present one. Let’s get this fire out and then we’ll figure out fire prevention for the future. But really the important thing to do now is to figure out how we get the American economy restarted and that’s not going to be easy and its not going to be soon, but its going to get done.

SG: But there is debate about whether there should be fiscal stimulus, whether tax cuts work or not. There is all of this academic debate among economists. What do you think? Is that the right way to go with stimulus and tax cuts?

WB: The answer is nobody knows. The economists don’t know. All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves. We do know over time the American machine works wonderfully and it will work wonderfully again.

SG: But are we creating new problems?

WB: Always

There is much more including a discussion of Madoff.

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

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Microsoft to shed 5,000 jobs

By Richard Waters in San Francisco

Published: January 22 2009 15:12 | Last updated: January 22 2009 15:53

Microsoft on Thursday embarked on the first company-wide job cuts in its 34-year history as it announced plans to cut up to 5,000 workers over the next 18 months.

The news came as the world’s biggest software company brought forward its second-quarter earnings announcement, revealing the extent of the damage caused by a slump in PC sales and growing consumer demand for “netbooks”, low-cost laptops which generate lower software revenues.

Steve Ballmer, chief executive, said in a statement that Microsoft was “not immune to the effects of the economy” but indicated that there would be no change in strategy.

He added: “We will continue to manage expenses and invest in long term opportunities… and will emerge an even stronger industry leader than we are today.”

The company-wide job cuts, out of a total of 96,000, will begin with 1,400 job losses on Thursday, Microsoft said.

The company came through the tech industry bust of 2001-02 with little damage, thanks to the continued growth of the PC business worldwide, and had been forced to make job cuts in the past only as a result of limited reorganisations of parts of its business, or to integrate acquisitions.

Microsoft shares were down 9.2 per cent at $17.75 in early Wall Street trading.

In an email to employees, Mr Ballmer said Microsoft was taking a range of other measures to reduce its expenses, including reducing travel budgets by 20 per cent, eliminating merit-based pay increases this year and scaling back plans to expand its headquarters campus in Redmond, Washington state.

Microsoft said its revenues in the second quarter grew just 2 per cent from a year before, to $16.6bn, lower than the $17.1bn that Wall Street had been expecting. Earnings per share fell 6 per cent to 47 cents, compared with expectations of 49 cents.

The shortfall reflected the sharp fall in global demand for PCs at the end of last year, as corporations cut back on IT spending and the normal jump in holiday sales to consumers failed to materialise.

Microsoft said the results also reflected the growing demand for “netbooks”, many of which come with the earlier Windows XP rather than the current Vista operating system, or even no Microsoft software at all.

As a result, revenues from the company’s client division, which handles Windows PC sales, fell 8 per cent in the quarter.

The figures were a stark contrast to results from Apple the day before, which showed continued strong sales of MacBook laptops despite the economic slump. Apple shares were up 7 per cent at $89.14 on Thursday.

http://www.ft.com/cms/s/0/112e40e6-e895-11dd-a4d0-0000779fd2ac.html

========================================================================================== To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe. Elektronsko sporocilo je pregledano z antivirusnim programom. This e-mail and any attachments may contain confidential and/or privileged information and is intended solely for the addressee. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. This e-mail may not necessarily reflect the official viewpoint of the company. E-mail message is scanned by Anti-Virus Software.

Bottom Line

Brazil’s growth collapsed in 4Q08, with several activity indicators displaying the worst decline on record. We reaffirm our below-consensus forecast for zero real GDP growth in 2009. This remains much more pessimistic than the consensus view. But in a few months from now, our forecast might sound too optimistic to some. In turn, economic weakness should pave the way for the COPOM to start cutting rates this week.

[...]

The downturn is more than just a short-lived inventory correction. Many firms seem to be cutting back production in an effort to reduce excessive inventories – as usually happens at the start of a business cycle downturn. An inventory correction may thus have exaggerated the output decline in 4Q08. But this does not mean that a sharp output rebound is imminent, for at least two reasons. First, it is far from clear that the inventory correction is over. To the contrary, judging by a recent business survey, the share of firms reporting excessive inventories has actually jumped high, to about 20% in December. This contrasts with single-digit readings in the last few years. Second, demand conditions are set to remain depressed, even after firms manage to successfully bring down unwanted inventories. In all, the pace of contraction might ease in the coming months, but output should remain down.

http://www.morganstanley.com/views/gef/index.html

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

This e-mail and any attachments may contain confidential and/or privileged information and is intended solely for the addressee. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. This e-mail may not necessarily reflect the official viewpoint of the company.

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Below are a few key points that will be addressed in the call:

• Amid the most severe US and global recession of the postwar period, global growth is likely to be negligible in 2009. In the face of this severe global downturn and financial market stress, there will be unprecedented levels of political risk as governments increase their intervention in the economy in the hope of boosting growth.
• In recent years, politically driven risks to markets have been most prominent in emerging markets. These countries continue to face these types of risk, but for the first time in many years, political and regulatory risk will have a dramatic impact in developed industrial democracies.
• The United States is only halfway through a recession that started in December 2007 and will be the longest and most severe in the postwar period. President-elect Obama’s economic team is first rate, cohesive, and pro-globalization—but with Democratic majorities in Congress, the risks of overregulation are significant. While a large fiscal package to support growth is a priority, the US economy cannot avoid a severe contraction that has already started. The policy response will have only a limited and delayed effect that will be felt more in 2010 than 2009.
• Europe and Japan will both contract 2.5% in 2009. With the industrial world already in outright recession and the emerging world navigating toward a hard landing, we expect global growth to be flat (around 0%) in 2009.

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To elektronsko sporocilo in vse morebitne priloge so poslovna skrivnost in namenjene izkljucno naslovniku. Ce ste sporocilo prejeli pomotoma, Vas prosimo, da obvestite posiljatelja, sporocilo pa takoj unicite. Kakrsnokoli razkritje, distribucija ali kopiranje vsebine sporocila je izrecno prepovedano. Ni nujno, da to sporocilo odraza uradno stalisce druzbe.

Elektronsko sporocilo je pregledano z antivirusnim programom.

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