Guy de Jonquières is a London-based writer and speaker on international economic affairs who previously worked for The Financial Times in positions that included world trade editor and Asia columnist and commentator.
The return to a positive household savings rate appears to be due chiefly to the "deleveraging" of consumers' balance sheets as they repay debt and probably also to an increase in precautionary savings in the face of recession and rising unemployment. It is impossible to know at this stage whether the savings rate will come down again once these factors have run their course. That will depend on whether individual consumers have undergone a permanent change in psychology. While the savings rate remains high, the obvious consequences are: 1) Lower consumer demand in the US and lower GDP… Read more
Britain probably has more experience than any other country of forced nationalisation of fundamentally uncompetitive motor companies, and it is not encouraging. The history of the British Leyland group, the UK's largest at the time, was taken into public ownership in the 1970s, for many of the same reasons as GM. It was unable to produce cars that enough people wanted to buy, its manufacturing methods were below par and it had a well-deserved reputation for poor quality and obsolete design. However, its collapse would have led to large job losses that were judged politically, as well as economically, unacceptable.… Read more
The more details come out about the hard numbers, the less beef there seems to be. The main advance was a bigger than expected increase in IMF resources, which might not have happened as quickly had the summit not been held. But a lot of important issues have been kicked into the future. At least the failure to issue the now-ritual incantation on completing the Doha round suggests that even politicians have been shamed into recognizing that their words on this issue are vacuous piffle. Overall, though, the meeting was the message, and perhaps its most important outcome was what… Read more
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