Imagine two young men who lived in the same town, had identical backgrounds and qualifications, and graduated from the same school in 2009, just as the economic crisis was at its height.
Bob was lucky: he got a job quickly and has been employed ever since. But John was unemployed for two years before finding a job.
It is not surprising that Bob is paid more than John now. But past evidence suggests that even if both remain continuously employed to the early 2020s, John will still bear scars from his late start. Assuming they lived in the UK, John is likely to be paid 16 per cent less than Bob when they are in their early 30s.
BEIJING, China - China's economy faces "huge pressure" to slow further despite stimulus measures, Premier Wen Jiabao said Sunday, damping hopes for a quick recovery from the deepest slump since the 2008 global financial crisis.
Companies and investors are closely watching the world's second-largest economy for signs of a further slowdown which could have global repercussions by hurting Chinese demand for goods from the United States, Europe and other struggling economies.
"The economy is running at a generally stable pace, but there is still huge pressure for it to go downward," the official Xinhua News Agency paraphrased Wen, the country's top economic official, as saying during a weekend visit to eastern China.
Gross domestic product rose by 7.6% in the second quarter, compared with the same period a year ago. That is down from 8.1% in the previous three months.
In March, Beijing cut its growth target for the whole of 2012 to 7.5%.
China accounts for about a fifth of the world's total economic output and any slowdown may hamper a global recovery.
There comes a time, in banking as in life, when deniability stops being an excuse, even if it’s plausible. So it became for Bob Diamond, the now former CEO of Barclays PLC, in early July.
Diamond resigned after his firm admitted to serially fudging submissions used to calculate the London Interbank Offered Rate (LIBOR), a key interest-rate benchmark of the global financial system. But he did not go quickly or with enthusiasm. Even after the British bank agreed to pay US$451 million in fines for its wrongdoing, and chairman Marcus Agius stepped down, Diamond vowed to stay on the top job. His presence was crucial to the firm’s recovery, he argued. Besides which, he had no direct knowledge of the malfeasance.
Abu Dhabi is exporting oil through the first Middle Eastern pipeline in three decades to circumvent the Strait of Hormuz as producers seek to nullify Iranian threats to block the shipping chokepoint.
The $3.3 billion link across the United Arab Emirates to the port of Fujairah, to be inaugurated July 15, ensures that at least some Abu Dhabi crude will reach buyers if Iran shuts the waterway. A closure of the transit point would put at risk a fifth of the world’s oil supplies.
Oil-consuming nations worried about a full-scale war in the Persian Gulf can breathe a sigh of relief — the UAE’s new pipeline which bypasses the Strait of Hormuz is set to come on line on July 15. However, that may not be such good news for high-cost producers.
As much as 1.5 million barrels per day — or 60% of the UAE’s oil production — would flow from the country’s port in Fujairah and calm markets that have nervously watched the Iranian crisis escalate. The pipeline has seen a few delays but officials seem hopeful this time around.
A delayed or insufficient response from European leaders to the crisis would further derail the recovery, it said.
The IMF downgraded its forecast for global growth for 2013 to 3.9% from the 4.1% prediction it made in April.
One of the biggest downward revisions was to the UK, now expected to grow by 1.4% in 2013. In April it predicted 2%.
The risk of a new depression - a sustained, severe recession - has struck fear into the heart of markets and driven monetary policy in developed economies since the current financial crisis began.
"We're in a very unfortunate position to be here," Richard Duncan, author of The New Depression, warned on CNBC's "Squawk Box Europe" Monday.
The big worries in advanced economies are all policy oriented. Europe, obviously, is a concern, but the IMF is growing increasingly nervous about the possibility that American politicians will let the country hurdle off the year-end fiscal cliff. If gridlock is such that all projected tax rises and spending cuts take effect, America's economy could take a hit equal to 4% of GDP, enough to seriously harm the world economy.
In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness. Financial market and sovereign stress in the euro area periphery have ratcheted up, close to end-2011 levels. Growth in a number of major emerging market economies has been lower than forecast. Partly because of a somewhat better-than-expected first quarter, the revised baseline projections in this
WEO Update suggest that these developments will only result in a minor setback to the global outlook, with global growth at 3.5 percent in 2012 and 3.9 percent in 2013, marginally lower than in the April 2012 World Economic Outlook. These forecasts, however, are predicated on two important assumptions: that there will be sufficient policy action to allow financial conditions in the euro area periphery to ease gradually and that recent policy easing in emerging market economies will gain traction. Clearly, downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action. In Europe, the measures announced at the European Union (EU) leaders’ summit in June are steps in the right direction. The very recent, renewed deterioration of sovereign debt markets underscores that timely implementation of these measures, together with further progress on banking and fiscal union, must be a priority. In the United States, avoiding the fiscal cliff, promptly raising the debt ceiling, and developing a medium-term fiscal plan are of the essence. In emerging market economies, policymakers should be ready to cope with trade declines and the high volatility of capital
The sequel to the financial crisis is under way, and there are no prizes for guessing who has been cast in the role of villain.
It has been a very bad few weeks for banking. The walk of shame has included employees tarred as rate-manipulators (Barclays PLC), money launderers (HSBC Holdings PLC), rogue traders (JPMorgan Chase & Co.), and outright fraudsters (Peregrine Financial Group Inc.).
Six of the 17 countries that use the euro currency are in recession. The U.S. economy is struggling again. And the economic superstars of the developing world — China, India and Brazil — are in no position to come to the rescue. They're slowing, too.
The lengthening shadow over the world's economy illustrates one of the consequences of globalization: There's nowhere to hide.
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