International Labour Organization: GLOBAL EMPLOYMENT TRENDS 2014 - by Raymond Torres

South Asia  farrner plowing rice field

Global unemployment increased by 5 million people in 2013

The global labour market situation remains uneven and fragile. True, there are encouraging signs of economic recovery in those advanced economies most affected by the global financial crisis which erupted in 2008.

Also, a number of emerging and developing countries − including: in the Sub-Saharan Africa − are enjoying relatively robust economic growth. The world economy may thus be growing somewhat faster than over the past three years.

However, the report finds that those economic improvements will not be sufficient to absorb the major labour market imbalances that built up in recent years. First, over the fore seeable future, the world economy will probably grow less than was the case before the global crisis. This complicates the task of generating the over 42 million jobs that are needed every year in order to meet the growing number of new entrants in the labour market.

Second, and more fundamentally, the root causes of the global crisis have not been prop erly tackled. The financial system remains the Achilles heel of the world economy.

The state of many banks is such that many sustainable enterprises, notably small ones, have limited access to credit, thereby affecting productive investment and job creation. Significant financial bubbles have re-appeared in a number of advanced and emerging economies, adding new uncertainties and affecting hiring decisions.

Also, global labour incomes continue to increase at a slower pace than justified by observed productivity gains, thus affecting aggregate demand.

Third; and this is an important new finding in view of the post-2015 development debate  −  little progress is being made in reducing working poverty and vulnerable forms of employment such as informal jobs and undeclared work. If confirmed, this trend would unambiguously delay the achievement of development goals.

To ensure lasting job recovery, the report highlights the role of a strategy that combines short-term measures (job-friendly macroeconomic and labour market policies) with further action to tackle long-standing imbalances.

Such a strategy would strengthen the economic recovery and pave the way for more and better jobs.

Read more wcms_233953.pdf

Global Economy: DEBT MASQUERADING AS GROWTH!

The market Oracle reports: "The greatest economic, political and societal collapse in recorded history is unfolding and has been doing so ever since the final denouement of partially sound money occurred at Bretton Woods II in August 1971 – thereby allowing governments, the financial systems and elites to substitute money printed out of thin air and politically correct/corrupt legislation for sound economic policies.  This process has been unfolding for 40 years and is nearing its demise.  

Growth now is a function of expanding credit, financing government and consumer consumption and calling it GDP.  The developed world has become Something for nothing societies are like locusts they eat everything right down to its roots, including next year’s seed corn.  They will issue debt until it no longer can be sold. 

They will print money until it is no longer accepted.  This process is well established and underway (think Venezuela, Greece, Argentina, this is the future).  To illustrate the LACK of GROWTH, look at this chart of GDP from Chris Wood at CLSA and subtract the deficit:

Most economists are PREDICTING accelerating GDP growth in 2014; you sure wouldn’t come to that conclusion based upon median family incomes since 2008;  

Or the crash in PERSONAL incomes over the last year  

As you can see, the only period that compares to this CURRENT CRASH in disposable income in the last 20 years was the crash of 2007-2009.  Do you think this reflects a robust economy in 2014 as predicted by the MSM and Keynesians?  To grow the economy, we must borrow money to finance spending and report it as GDP.  DEBT MASQUERADING as GROWTH! 

Now, the developed world’s economies have been hollowed out (by runaway regulation, taxes and crony capitalism) and much of the wealth creation occurs in the emerging world.  Crony capitalists and their minions in government just attack the private sector where future growth and productivity must come from. 
 
They carve it up and destroy the future creative destruction (aka “Capitalism”) which must occur for growing middle classes and economies.  The powers that be are MINTING fire hoses of NEW money, creating at least 8000 million dollars/yen a DAY (2 million million a year or 2+ trillion per year) to support the global economy, bankrupt sovereigns and financial systems.   

Very little BAD can happen when they are printing and injecting this amount of money into the financial system and government coffers on a daily/yearly basis. “Currencies don’t float they just SINK at different rates”

Asset-backed economies provide the ILLUSION of growth in the developed world driven by currency depreciation (ASSET prices rise/reprice as the purchasing power of the currency they are denominated in sinks) and never-ending leverage to fund consumption and HIGHER ASSET prices.  This is insane behavior, but now is the last refuge of the powers that be.
 
Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." 

EU-Digest

Global Economy Turmoil: Nervous Markets Rattle in China, Turkey, USA, Mexico, Europe and Argentina - by Richard Barley

A trouble shared is a trouble halved, or so the saying goes. But the troubles are piling up quickly for emerging markets.

Jitters about China, the meltdown in the Turkish lira, violent protests in Ukraine and the plummeting Argentine peso—underlaid with continuing nerves about the withdrawal of U.S. monetary stimulus—have all combined to hit risk appetite. The problems aren't particularly new and don't have much in common, but the combination is proving toxic.

The biggest repercussions have been in the foreign-exchange markets, where even currencies of countries with relative fundamental strengths, such as the Polish zloty and the Mexican peso, have started to show signs of strain. Pressures have also emerged in asset classes that have so far remained resilient, such as U.S.-dollar-denominated emerging-market bonds. That will understandably make investors nervous.

But some of the concerns may ease. China is seeking to shift from an economy led by investment to one driven by consumption. This is such a vast and complex process that worries about how it is progressing will be with us for a long time yet. The small dip in China's manufacturing purchasing managers index that some cite as a key reason for the market turmoil seems just a pretext.

Ukraine and Argentina both look worrying, but their impact on global financial markets should be limited. If other Latin American or Eastern European currencies get hit, but are supported by relatively strong economies, that could make them look good value in time.

Turkey bears watching closely. The solution to the continuing selloff in the Turkish lira—which Friday hit a fresh record low of 2.33 to the dollar—seems clear: the Central Bank of Turkey needs to raise interest rates. But political turmoil means it is unwilling to do so; its interventions in support of the lira are inadequate in the meantime.

This could cause larger problems. Turkish companies have large foreign-debt exposures, and the lira's slide could cause balance-sheet strains. That suggests that the central bank will ultimately have to hike rates to avoid a bigger crisis. But the situation could get much more uncomfortable before that happens.

Meanwhile, the risk aversion in developed markets smacks of using the situation to exit some very popular and profitable bets. Southern European government bonds and stocks, hybrid securities that blend features of equity and debt and subordinated bank bonds have all had a strong start to the year; but they are also volatile. No wonder investors might take the chance to step back.

Read more: Heard on the Street: Emerging Mix Rattles Nervous Markets - WSJ.com

Europe tightens up financial market rules - but Britain once again "odd man out"

The Europe Union is to tighten regulation of financial markets under a deal to prevent any repetition of the rampant speculation which helped bring down banks and crash the global economy.

After two years of tough talks, the European Parliament and negotiators for the 28 member states agreed a deal in principle that sets new rules to regulate the market, known as MiFID II.

"These new rules will improve the way capital markets function to the benefit of the real economy," said the EU's Financial Markets Commissioner Michel Barnier.

"They are a key step towards establishing a safer, more open and more responsible financial system and restoring investor confidence in the wake of the financial crisis."

Barnier first pushed for the new rules in 2011 at the height of the eurozone debt crisis which was sparked by the 2008 global financial crash.

They aim to curb speculative trading in commodities and to regulate high-frequency trading so as better to protect investors and make the markets less crisis prone.

They will apply to investment firms, market operators and services providing post-trade transparency information in the European Union, a parliament statement said.

They will notably force market players to buy and sell financial instruments on regulated markets comparable to stock exchanges to ensure that all trading is tracked by MiFID.

 

International aid group Oxfam welcomed the deal but warned of the dangers of exemptions, especially for Britain which is home to one of the world's largest financial markets in London.

"Today's decision marks a good start in tackling 'gambling' on food prices which are a matter of life and death to millions," Oxfam said.

But "the deal is far from perfect," Oxfam said." Unjustified exemptions were granted to powerful lobbies and limits will be set nationally, rather than at the European level.

"There is a real risk, particularly in the UK, of ineffective sky high limits triggering a regulatory race to the bottom between European countries," it said in a statement.

Read more: Europe tightens up financial market rules - Yahoo News

The Dark Force: The Financial Elite Who Gave Us 2008 Had No Eye to See and No Ear to Hear

We have seen the enemy and he is us; the enemy(us) being zero interest rates and unlimited easy money round the globe that could become a worse bubble than the 2008 credit bubble. The only thing we have to fear is QE that lasts forever.

In the spring of 2008 the IMF predicted that the economy of the developed nations would grow by 3.8% in 2009. Instead, due to the global financial crisis and the Great Recession, the economies of the U.S., Europe, Japan declined by 3.9%. That is a major mistake of prognostication. This preposterously optimistic forecast by the central bankers and establishment economists was shockingly wrong by a margin of almost 8%, indicating economists were totally unaware of the perfect storm of financial crisis descending on them.

These are the reputed establishment types who dominate enclaves like the IMF, as well as the Federal Reserve who are supposed to be measuring reality. The whole absurd farce reminds international economist William White (recommended to me by the soon-to-be Vice Chairman of the Federal Reserve, Stanley Fischer) of the comic strip Pogo. Pogo’s mantra was “We have seen the enemy and he is us!”

The “enemy” were the brains of the global economic system and they were duping themselves and each other, White suggests. They were so far inside the system they did not see the crisis that was on top of them. It takes an “outsider” to see that, White believes. As to the Bank of International Settlements, the BIS, where White once was a top economist, “we put out both public warnings as to the dangers as well as in our private reports to clients,” White tells me. ” But, the warnings were ignored.”

The problem is cultural and the result of the denial of the elite, according to White; a tale of seduction amongst the creators of 2008: “ borrowers, lenders, regulators, central banks, academics and politicians, [who] were each seduced into believing different things that were not true.” The relationship between these various parties also contributed to them having “no eye to see and no ear to hear,” White told a distinguished audience on October 24 in London, at a presentation entitled What Has Gone Wrong With the Global Economy? Why Were Warnings Ignored? What Have We Learned From the Experience?

I mean to tell you what lessons White has learned, and even though he is not a regular on CNN or columnist for the FT, Stanley Fischer (you’ll be hearing a great deal more about Fischer, once he becomes Vice Chairman of the Fed) assured me that White saw 2008 coming as early as 2003 in a paper White, then at the BIS, gave at the Jackson Hole, Wyoming conclave of central bankers. He had the vision and the intelligence to see the disaster coming. And he is predicting odds on another problem sooner or later.

So, what disaster did White warn me and you about that could be coming down the road? “Expansionary monetary policy…has its shortcoming… such policies have undesirable unintended consequences,” White explained in London. By undesirable, he means a much larger ‘too big to fail’ problem than we had before.

He means the creation of “zombie companies and zombie banks” that “have contributed to more risk taking and unjustified increases in asset prices.” To sum up, the crisis is not over.

White fears another catastrophe from the knee-jerk, ever more aggressive, overly long-lasting easy money policies espoused by Alan Greenspan and Ben Bernanke, to be inherited by Janet Yellen and Fischer once they are in place.

Here’s the gist of his warning. In the financial market crises of the past many decades — 1987, 2000, 2008 — the solution has always been the same, increase money supply and maintain rock-bottom low interest rates, says the former BIS economist and Canadian central banker. He is plainly worried about the outcome of a policy that just keeps printing more money aggressively with increasingly less positive results on economic growth than before.
White strongly questions his friend Ben Bernanke’s devotion to Quantitative Easing. What if the roots of fragility and accidents are just waiting to happen from being wrong about repeating over and over again the same excessive easy money policy? What if the Greenspan Put and the easy money that resolved crises in 1987, 1991, 1994, 2000, and 2008 are only a prologue for an even worse crisis that additional QE won’t solve?

White’s most intense fearsome nightmare is that the boom and rising bubble of home prices in Canada, Poland, Israel, Germany, Australia and New Zealand will eventually burst just as they did in the U.S. in 2007-2008, triggering another worldwide recession that the elite finance opinion makers will meet with an even more aggressive easing of money and lowering of the cost of money.

“Why do people believe what they believe?” White asks me on our hour-long transatlantic phone call. “People with influence over the system want us to believe that the system they prefer–more and cheaper money–is the best of all solutions for every crisis.”

What’s gone wrong is that ultra easy money policy is seen as a risk-free solution, even though the forecasting records based on easy money create forecasting records that are just too damned optimistic. “What if Bernanke’s faith in QE is the root of fragility and accidents waiting to happen?” White asks me. He has come to understand that there has grown an unstated alliance between economists and powerful interests, who have seduced each other into an unannounced alliance over a policy that benefits them in the short run, but may create more severe crises and disasters down the road.

In his October 24 London talk, White put it another way: “The Great Moderation, as Hyman Minsky would have predicted, generated the belief that the world had become a permanently less risky place.” The result of this mutual seduction was the manipulation of LIBOR, the reckless selling of toxic assets to unsuspecting buyers, and the hiding of highly leveraged risky activities in the off-the balance sheet shadow banking system.
As Pogo said: “We have the seen the enemy and he is us.”

The Financial Elite Who Gave Us 2008 Had No Eye to See and No Ear to Hear - Forbes