Around the Globe 08.29.2013

Growth Exceeds Estimates as U.S. Weathers Budget Cuts: Economy – Bloomberg.

U.S. GDP accelerates sharply in second quarter | Reuters.

Second-Quarter GDP Revised Upward – WSJ.com.

US GDP Performance Through 2Q2013

A recovery usually accelerates, but not this time.  In fact, it seems that the country has already seen this “recovery’s” highest growth rates, but this does not fit into the msm recovery narrative.  Whenever GDP growth accelerates since 2009, people expect it to continue, but it hasn’t.  2.5% is tepid growth for the U.S.  We need to achieve a 3.5-4% annual growth rate to begin putting a dent in those unemployment numbers.  The country has grown at or above this range exactly four times since 2009 and not once in the last year and a half as illustrated in our chart.

The recovery is not accelerating, and the problem is low demand, particularly from the bottom 93% of the country’s income distribution.  It seems a rich person’s recovery is no recovery at all.

EU’s Rehn sees European recovery strengthening in 2014 | Reuters.

Cypriots Try Getting By Without Credit – WSJ.com.

Ollie Rehn has been predicting growth or strengthening growth in the Eurozone since it entered recession.  Eventually, he was right, and it took less than two years.  Read the article carefully.  He trumpets some bureaucratic victories and cherry-picked data as evidence for his prediction.  How about this evidence?

Businesses have no money to invest to spur growth due to tightening standards from zombie banks:

Eurozone Outstanding Loans to the Private Sector

Consumers have no money to spend; retail sales have been declining for  two years save for one month:

Eurozone Retail Sales YoY 08.2013

When Ollie Rehn cheerleads the Eurozone economy, he conveniently ignores the situation on the ground in Greece and Cyprus, whose economies are dissolving, and in Spain and Italy who are not too far behind.

The Eurozone is suffering from a lack of demand, which will suppress growth for the next few years, no matter what the alphabet soup of Brussels says or does.

Exclusive: India might buy gold from citizens to ease rupee crisis | Reuters.

Gold in Rupees 08.29.2013

Let me get this straight.  Indians have realized that their currency is becoming worthless and have been purchasing gold to preserve their wealth.  The RBI’s genius plan is to offer to purchase this gold back from the people in exchange for that same currency.

RBI, the problem is that your citizens do not wish to hold your paper anymore.  If you want banks to buy gold back from consumers, then don’t offer rupees.  Pick another currency instead.  Ollie Rehn was just telling us how awesome the economy in the Eurozone will be in 2014, so maybe you could offer Indians euros.  Just a thought.

Indonesia Raises Interest Rate as India Aids Rupee – Bloomberg.

Bank Indonesia Hikes Interest Rates to Bolster Plunging Currency – WSJ.com.

USDIDR 08.29.2013

From Bloomberg

Volatility in emerging markets has been rising in the last two weeks or so, but I believe the trend will cease and retrace a bit after Labor Day when liquidity conditions improve.  Unfortunately, this will prove to be a temporary respite until Uncle Ben cranks up the magic money machine again.

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