Current-account balances worldwide / Economist

spain is really looking ugly..... to drunk from the bubble....this will change cery soon....

in den ländern mit den größten immoblasen sind wohl nicht ganz zufällig auch die defizite bsonders ausgeprägt....

America spends much more than it produces, resulting in a current-account deficit of 6.5% of GDP last year. One of the most prominent and enduring features of the macroeconomic landscape, America's deficit will narrow this year to 6.1% of GDP, according to the OECD's projections, before widening again to 6.2% in 2008. Spain's external deficit is even bigger relative to the size of its economy and will amount to 10.5% of GDP in 2008, the OECD projects.

Turkey should be able to sustain a deficit of over 7% of GDP this year and next, the OECD forecasts, thanks to resurgent foreign direct investment and private loans. Thanks mainly to German thrift, the euro area as a whole will run a small surplus with the rest of the world

Brad Setser on the US Deficit

Brad Setser hits on a point that is not widely covered. the us has to serve their debt and this is becoming more and more a heavy burden on the current account deficit. especially after all the "cheap" debt from the past is rolling into higher rates......to bad that the us abandoned the 30 year .....has and with 59 trillion future liabilities the problem will only get worse..... http://tinyurl.com/2xyqto . make sure you read the entire brilliant piece from Setser and click on the headline!

Brad Setser beleuchtet hier mal wieder einen punkt der ansonsten in der diskussion oft vergessen oder unterschätzt wird. die zinslast die die usa aufbringen müssen um ihre gewaltigen schulden zu finanzieren wird immer mehr zu einem problem und lässt das defizit weiter ansteigen. das gilt besonders weil die billigen krediten jetzt in teurere refinanziert werden müssen.....jetzt rächt sich das die usa die 30 jährige staatsanleihe eingestampft haben ....und mit zukünftigen verpflichtungen von 59 trillion $ dürfte das problem nicht kleiner werden.....lest bitte unbedingt den ganzen bericht von Setser und klickt auf die überschrift!

I think the income balance is poised to deteriorate significantly. That is the real source of my pessimism. The market no longer expects the Fed to ease by much. Short-term rates will stay around 5%. And long-rates have moved close to 5%. That suggests to me that the interest bill on the United States external debt is set to rise: the US will be taking on new debt at 5% plus to cover its deficit, as well as rolling over an awful lot of old debt at higher prices

I consequently expect the income balance to emerge as an important drag on the US current account deficit. If my forecast on the income balance is close to correct, it implies a rise in the current account deficit even if the trade deficit stabilizes in nominal terms and starts to fall as a percent of US GDP.
größer/bigger headline

Paulson, Wu Cool China Growth; Local Leaders Add Fuel

central planning.......looks like some local leaders don´t care (or Beijing isn´t still serious)......it will be fascinating to see how this plays out.

so viel zur zentralen planung aus peking......einige provinzfürsten scheinen sich nicht sonderlich zu kümmern zw peking macht noch immer nicht ernst.....bin gespannt wie sich das letztendlich entwickelt.

The Washington talks between U.S. Treasury Secretary Henry Paulson and Chinese Vice Premier Wu Yi on curbing China's runaway growth and smoothing trade frictions will have to take Huang Yong into account.

Huang, the top economic-policy official in Zhejiang province, boasts of the prosperity that textile and shoe manufacturing have brought to his area. And that's just the beginning, he said in an interview at a tea house in Hangzhou, the capital -- no matter what the officials who are meeting in Washington this week might think. The next step is developing industries like petrochemicals, pharmaceuticals and steel.

Such aspirations, typical for Huang's counterparts throughout China, frustrate Beijing's efforts to slow expansion in industries such as steel that are plagued with overcapacity. Too much investment in unneeded factories may lead to lower profits for Chinese companies, national financial instability and increased tensions with the U.S.

``As long as producers have the support of local governments, who are most worried about employment and growth in their own backyards, they will find ways to put the central government off,'' said Jonathan Anderson, chief Asia economist for UBS AG in Hong Kong. .....

Trade Surplus
The trade surplus is forecast to top $200 billion this year, a record, and its benchmark stock index is up more than 87 percent since December. To curb lending that fuels excessive growth, China last week ordered banks to set aside more money as reserves, the fifth such mandate this year, and raised interest rates for a second time.....

thanks to Mish http://globaleconomicanalysis.blogspot.com/

Reducing Exports
As Wu was on her way to Washington, China's Finance Ministry announced an export tax of as much as 15 percent on steel slabs and 10 percent on steel wire and rods to reduce exports of ``energy consuming, polluting and resource-intensive products.''

Tom Danjczek, president of the Washington-based Steel Manufacturers Association, said he doesn't expect the tax to do much to curb overproduction. ``Will the tax possibly close any of the inefficient 60 to 80 million tons of subsidized capacity?'' he said. ``Probably not.''

Since 2003 the Chinese government has been trying to reduce overcapacity in industries including steel, aluminum, cement and autos, creating a list of ``no go'' sectors where investment would be restricted.

The plan hasn't worked. ``It's difficult to think of a single sector where the moratorium on investment approvals was actually effective,'' UBS analysts said in a report last August.

Fixed-asset investment in real estate and factories rose 25.5 percent in the first four months of 2007 compared with the same period a year earlier. That's up from a 24.5 percent increase for all of 2006. ....

Over the past three years, Chinese authorities have tightened lending and closed smaller, inefficient steel mills, efforts they predict will eliminate 35 million metric tons of capacity this year.

In reality, China will not only replace that amount, but add another 70 million metric tons in 2007, bringing total steelmaking capacity to 591 million metric tons, according to a forecast by CBI Research & Consulting in Shanghai.

By comparison, total U.S. capacity this year will be about 115 million metric tons, according to the Steel Manufacturers Association in Washington, which represents 45 mainly North American steel manufacturers.

Now, China's modern mills turn out more than the U.S., Japan and Russia combined. Steel production in China more than tripled over the past six years to an estimated 470 million metric tons this year, CBI said.

Unused Capacity
``China has more unused capacity than we have capacity,'' Danjczek said.
More is being added. Baosteel Group Corp., China's biggest steelmaker, and Handan Iron & Steel Group plan to build a 19 billion yuan ($2.5 billion) plant in the northern city of Handan to boost production.

``China's steel industry has no concept of profits and costs and is only interested in creating jobs,'' said Daniel Dimicco, chairman of Charlotte, North Carolina-based Nucor Corp., the second-largest U.S. steelmaker. ``In many product categories it has destroyed pricing.''
The aluminum industry looks much the same. Investment in smelting more than doubled this year, and last month China's economic-planning agency reiterated plans to halt construction on new plants that breach rules designed to curb overcapacity.

`The Main Risk'
``China for us is the main risk to aluminum prices,'' said Michael Lewis, global head of commodities at Deutsche Bank AG in London.

Local communities try to attract heavy industry with tax breaks, subsidized loans, land deals, and energy and infrastructure assistance, often in so-called industrial enterprise zones.

>just like in the western world....genau wie im westen....

...While Beijing wants to evaluate local officials on how they factor energy use and the environment into investment decisions, he said, ``it's very hard to do that because you can't measure the quality of economic growth.''

`Severely Punished'
According to China Daily, the government-controlled English-language newspaper, 14 provinces have continued to offer preferential electricity prices to high-energy-consuming industries even with Beijing directives to stop. Local officials who expand investments ``blindly'' will be ``severely punished,'' the government warned in January.

China's statistics bureau yesterday said that the economy risks going ``from a stage of relatively rapid growth to overheating.'' ....