In order to sensibly comment on the ongoing CAW/Big Three negotiations, one would have to be party to the details of the current CAW negotiations – and I’m not. That said, it seems sensible to assume the CAW is being advised by serious economists, and that it relies and acts on that advice.
I wrote the foregoing about 10 days ago. Last week a headline blared:
CAW prepared to shut down Detroit 3 plants if no deal by Sept. 17. Yesterday, another headline said:
CAW accuses Detroit Three of seeking ‘dramatic changes’ week before strike deadline.
I continue to say that:
- as I see things, ‘to work’ in difficult economic times is far better than ‘not to work’; and,
- I hope for the sake of its members the CAW is receiving seriously good and balanced macro-economic and Canada specific economic advice – and in the end will act on that advice objectively and unemotionally.
Perhaps more importantly, and from 20,000 feet, one has to wonder how other collective public and private sector bargaining units will behave if things generally continue to deteriorate economically across multiple countries.
Topical References:
CAW overwhelmingly support strike mandates at Big Three in contract talks, from
The Globe and Mail, from The Canadian Press, August 27, 2012 – reading time 2 minutes
; CAW prepared to shut down Detroit 3 plants if no deal by Sept. 17, from
The Financial Post, Scott Deveau, September 5, 2012 – reading time 3 minutes; and
CAW accuses Detroit Three of seeking ‘dramatic changes’ week before strike deadline, from
The Financial Post, Scott Deveau, September 10, 2012 – reading time 3 minutes.
Brief Commentaries prompted by world headlines (collective reading time 4 minutes)
Asia >> China: China’s latest trade numbers
Yesterday China announced August trade data that showed imports were far lower, and exports were somewhat down, from expectations. Questions are now starting to be raised as to whether China’s current targeted 2012 GDP growth of 7.5% will be achieved.
Given the importance of China’s growth to the overall world economy at this point in time, this is an article you ought to consider carefully reading and thinking about.
Topical Reference:
China’s trade sinks to worst since depths of financial crisis, from
The Financial Post, from Reuters, September 10, 2012 – reading time 4 minutes. Also read
Perfect Economic Storm for China: Slow Growth and Rising Inflation, from
Profit Confidential, Michael Lombardi, September 11, 2012 – reading time 2 minutes.
Europe >> United Kingdom: Moody’s negative on U.K. Banks
Moody’s is reported as having just put U.K banks on notice of possible further credit downgrades, following from downgrades in three months ago.
Topical Reference:
Moody’s Remains Negative on U.K. Banks, from
Fox Business, from Dow Jones Newswires, September 10, 2012 – reading time 3 minutes.
Eurozone >> Germany: Tomorrow’s (September 12) German Constitutional Court Ruling
Whether you follow it in this Newsletter or elsewhere, be sure not to miss Wednesday’s German Constitutional Court ruling on the legality of the Eurozone’s European Stability Mechanism (read ‘bailout fund’) and the related ‘fiscal compact’ for budget discipline.
While it strikes me as likely the Court ruling will confirm the legality of the Mechanism, it will be a very big deal if it doesn’t.
Topical Reference:
Germany’s constitutional court won’t de;ay bailout fund ruling, from
Reuters, September 11, 2012 – reading time 2 minutes.
North America >> United States: In the U.S. a lot of new jobs are low-wage jobs
According to the referenced article, since February 2010 4.6 million of the 8.9 million U.S. jobs lost during the recession have been recovered. That seems bad enough. However, about 40% of those new jobs are said to pay about $15 per hour, whereas average hourly rates for all U.S. private sector employees were about $23.50 in August.
The article includes an interesting chart that compares disposable income and consumer spending since January 2008 and suggests, I think sensibly, that if disposable income does not go up over time, neither will consumer spending. Consumer spending is a big ‘GDP’ related deal. For example, consumer spending is said to account for about 70% of U.S. GDP.
Topical Reference:
Many New Jobs Created in Low-Wage Industries, from
The Wall Street Journal Real Time Economics, Jeffrey Sparshott, September 10, 2012 – reading time 3 minutes.
Brief Country Risk Commentaries prompted by world headlines (collective reading time 1 minute)
Asia >> Mongolia: Mongolia to increase control over its resources?
Mongolia is said likely to introduce new laws, giving it greater control of its resources.
This is a ‘country risk’ trend not isolated to Mongolia, and one that needs to be monitored with increasing diligence and care if you invest in, or trade, the shares of companies doing business outside their ‘home’ jurisdiction.
Topical Reference:
Mongolia wants greater control of Gold, Copper resource, from
Bullion Street, September 10, 2012 – reading time 3 minutes.
Important Snippets From Today’s Commentaries
Snippet #1: From 20,000 feet, one has to wonder how collective public and private sector bargaining units will behave if things generally continue to deteriorate economically across multiple countries.
Snippet #2: Since February 2010 (to August 2012) 4.6 million of the 8.9 million U.S. jobs lost during the recession have been recovered. That seems bad enough. However, about 40% of those new jobs are said to pay about $15 per hour, whereas average hourly rates for all U.S. private sector employees were about $23.50 in August.
Snippet #3: Consumer spending is a big ‘GDP’ related deal. For example, consumer spending is said to account for about 70% of U.S. GDP.
Snippet #4: Increased government involvement with their resource industries is not an isolated ‘country risk’ trend. It is one that needs to be monitored with increasing diligence and care if you invest in, or trade, the shares of companies doing business outside their ‘home’ jurisdiction.
