"The end of Growth", Richard Heinberg's new book

The world's biggest economy will expand between 2.7pc and 2.9pc this year, weaker than it expected just two months ago. The latest evidence from manufacturing, the housing market and the consumer – still the engine of the economy – all suggest the deterioration that started in the first quarter of this year has extended into the second.
"Part of the slowdown is temporary, part of it may be longer lasting," said Fed chairman Ben Bernanke. "We don't have a precise reading on why this slower pace of growth is persisting." "Economists insist that recovery is at hand. Yet, unemployment remains high, real estate values continue to sink, and governments stagger under record deficits. The End of Growth proposes a startling diagnosis: humanity has reached a fundamental turning point in our economic history. The expansionary trajectory of industrial civilization is colliding with non-negotiable natural limits."The End of Growth describes what policymakers, communities, and families can do to build a new economy that operates within Earth’s budget of energy and resources. We can thrive during the transition if we set goals that promote human and environmental well-being, rather than continuing to pursue the now-unattainable prize of ever-expanding GDP." http://richardheinberg.com

Is the beginning of a new era of progress without growth?

The obscure disease of the West

Yesterday I was leafing through some newspapers on the net when a China Daily's article caught my eye. I couldn't believe it was true.

The Chinese Ministry of Commerce (MOC) spokesman Yao Jian said Chinese companies invested $20.35 billion in non-financial sectors in 110 countries and regions during the first five months, up 42.3 percent year-on-year. Chinese companies investing overseas should abide by local laws and should not be discriminated against, he added.

Well, what can I say?

I guess we will have big big troubles with China in the next few years.

Behind World's inflation

U.S. consumption increased by 3.2 % over the fourth quater of 2010. Although Somebody has hailed it as a sign of economic growth, this is nothing more than pure inflation determenated by deficit and monetary stimulus of the Federal Reserve.

Monetary expansion created by the FED has again shown its destructive effects: inflation has begun to be exported overseas. U.S. dollar is enjoying an enviable position of reserve currency that doesn't follow the rules of other currencies and allows the U.S. to borrow, spend and consume with money that the FED simply creates "out of thin air". In this way the U.S. can expropriate resources from the world by buying other's goods and services abroad like a counterfeiter who spends his fake money at a shop. Unfortunately, the excess of dollars return back home to be converted into Treasury bonds whereas U.S.  partners with this same amount of dollars finance their deficits and encourage an irresponsible consumption of resources. In fact they haven't any incentive to use their dollar surplus to buy goods and services as in recent decades American industry completely lost its competitiveness. 

So, What does it happen to U.S. partners currencies? 

The dollars obtained by exchanging for exported goods must be converted to be spent in these countries. 

If markets did freely, the excess of dollars would raise the price of currencies with which U.S. dollar was exchanged. But, actually it doesn't work like that and to prevent worsening of their exporting, U.S. partners have no other choice but to keep their currencies competitive with a new monetary expansion. 

In fact, to maintain a stable exchange rate, they must buy the dollar surplus by resorting to a quantitative easing. Therefore, when the Federal Reserve prints fresh money "out of thin air", other central banks make the same thing. In this way, the amount of dollars sold is parked as Treasury bonds, allowing the U.S. to keep their interest rates low and to continue selling its debt. This whole process is an untold damage to economies in terms of inflation. 

In summary, the  G-20 central banks have flooded the economy with liquidity without any relation to the real global production. All this is the cause of rising food price, speculative investment and ephemeral illusion of prosperity. 

In North Africa, this economic system based on fraud now starts to kill people too.