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Thursday, February 18, 2010

Better days ahead?

Well, better news are abound about the American economy. A report from the Wall St. Journal states that manufacturing is up and inventories are moving.

I would bet 1 billion Zimbabwean dollars, that the Obama administration or the persons on his Economic Council, can account for the recent activity.

The worst of it all, the employment statistics are still soft. While over the last two months, un-employment has been receding. However, it still is a little to early to suggest that there will be permanent jobs for folks within the next six months.

While higher manufacturing and orders, should indicate that jobs are soon to follow- with a lag in profit margins and employment, we still would have to wait and see what follows next.

No doubt, US exports, should be higher considering the issue of the value of the American dollar, due to the low interest rates, which would have boosted production as well as made exports cheaper- relative to Chinese, European and Japanese goods.

The issue with the higher production, is certainly tied to that of the countries and firms competing with American goods.

Asia is becoming more insulated, as has been pointed out by Razeen Sally (LSE/ECIPE) in a recent paper- who also claims that it is fool hardy by Asian and South-East Asian economies, to further insulate themselves, because it would 1. damage the unilateral system and 2. (most importantly) the fact that the South-East Asian economies, in particular, have low value per currency coupled with producing similar goods- so, in a sense, negating any gains from trade, especially since a) import competing goods are too similar to export competing goods and, more importantly, for the way I see and expound on Sally's analysis b) GDP per capita per country, particularly in Indonesia, a large economy, is relatively small, making value per export not worth the effort of insulating it from the rest of the world via trade barriers and regional trade partnerships.

The beat goes on, as they say. We all will have to wait and see- particularly in the Caribbean, as we all wait for the USA and, to some extent, Western Europe to start spending money and making money, again.
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