OECD Joins Critics Of Economic Dithering

Today the Organization for Economic Cooperation and Development (OECD) joined the chorus of economic observers and major players calling for urgent action to put "weakening global [economic] activity back on track."

The OECD calls for action both by Europe and the United States. OECD's latest Economic Outlook report foresees serious risks to the global economy.

OECD Chief Economist Carlo Padoan observes that “Prospects only improve if decisive action is taken quickly.” 

The Outlook’s baseline scenario assumes that policy-makers take sufficient action to avoid disorderly sovereign defaults, a sharp credit contraction, systemic bank failures and excessive fiscal tightening. It sees GDP across the OECD countries slowing from 1.9% this year to 1.6% in 2012, before recovering to 2.3% in 2013. Unemployment in the OECD area is also projected to remain high for an extended period, with the jobless rate staying at around 8% through the next two years.

“We are concerned that policy-makers fail to see the urgency of taking decisive action to tackle the real and growing risks to the global economy,” Mr Padoan said during the launch of the report in Paris. “We see the US  growth recovering only slowly, the euro area entering into mild recession and Japan growing faster because of reconstruction, but this boost is temporary and will fade away.”

Japanese Carrier Force Gets Underway

Exactly seventy years ago, November 26, 1941, a Japanese carrier force, the Kido Butai, under command of Vice Admiral Chuichi Nagumo, got underway from Hitokappu Wan in the Kurile Islands, under strict and effective radio silence. The force of six aircraft carriers, with 359 airplanes embarked, was the most powerful carrier force with the greatest concentration of naval air power ever assembled up to that time.

Accompanying the force were two fast battleships, two heavy cruisers, one light cruiser, nine destroyers and three fleet (long-range) submarines. An advanced expeditionary force including twenty fleet submarines and five midget submarines, had already departed Japan enroute to the objective area. The force also was accompanied by eight oilers for refueling along the way.

The day the Kido Butai left the Kuriles, Japanese negotiators in Washington received a note from US Secretary of State Cordell Hull proposing a solution to the crisis in the Far East. Japanese leaders dismissed the Hull note as the same old proposal they had rejected before.

Japan had not yet made an irrevocable decision for war. Nagumo got underway with the understanding that if "negotiations with the United States reach a successful conclusion, the task force will immediately put about and return to the homeland." The final decision was to be made early in December.

November 26th was a particularly active day on the diplomatic front in Washington as Ambassadors Nomura and Kurusu frantically sought agreement with Secretary of State Hull. Messages to them from Tokyo (intercepted, decoded and translated by US Army and Navy intelligence) emphasized the importance of oil. Tokyo wanted agreement for the US to supply 4 million tons of oil per year.

Nomura and Kurusu reported diminishing hopes for agreement, and dutifully reported that Hull was meeting with the Chinese ambassador as well as with them. Nomura and Kurusu knew nothing about the Kido Butai's movements.

The clock was ticking.

Spelling Assistance

Those of you who are "spelling challenged" may wish to know that even the venerable New York Times occasionally gets a word wrong. But the "gray lady" knows how to fix it without making a fuss.

Two minutes ago, I was reading the front page of the on-line edition of NYT, adorned with a photo of Governor Rick Perry in his uniform as a Texas A&M cadet. The caption explained that he was in his "core of cadets uniform." I began reading the caption to my wife, to point out the error, and as I was reading it, the spelling changed to "corps of cadets uniform."

No fuss, no muss, just quietly change it. There was not even a strike-through as in "core corps of cadets uniform."

I'm waiting to see if they acknowledge the error.

Euro - The First Decade

Next year will be the tenth anniversary of the introduction of the Euro into circulation.

We were living in Europe (though not in the Euro Zone) at the time. As I recall, the Euro was worth about 85 cents when it was introduced. It was a great convenience to travelers, who over much of Europe no longer had to convert dollars into a dozen different currencies.

But I always wondered how the common currency would work in practice. We now know the answer - not very well.

Unless the Europeans get their act together, the first decade of the Euro may well be the last.

Greece, Italy And Now...Germany?

News from Europe isn't improving. Today, Germany attempted a bond auction and couldn't find buyers for about a third of the bonds. Looks like investors are casting a jaundiced eye even on Germany as a safe haven.

In truth, by some measures (primary deficit), Italy is performing better than Germany.

Austerity doesn't seem to be working for anyone. Investors, both in Europe and in the US, seem to be less concerned about deficits and sovereign debt and more concerned about the possibility of further deflation, recession and economic contraction. Americans should worry about what is happening in Europe, because a breakup of the Euro could drag the US economy down with it.

Keep your fingers crossed.

By the way, the US Treasury is having no trouble marketing securities at historically low rates.

So much for Standard and Poor's.

Oriental Election Recount

At the request of Mr. Hugh Grady, candidate for Oriental town commissioner, the Pamlico County Board of Elections met today to conduct a complete recount of votes for the commissioner race.  The recount confirmed the count reported after the official canvass held November 15. The bottom line: write-in candidate Warren Johnson defeated ballot candidate Hugh Grady by three votes, to win the fifth seat on the board.

TOWN OF ORIENTAL COMMISSIONER (Vote For 5) 1 of 1 Precincts Reporting Percent        Votes Michele Bessette 13.29%         211 Hugh Grady 10.01%         159 Sherrill Styron 20.34%         323 Larry Summers 17.76%         282 Barbara Venturi 16.62%         264 Candy Bohmert (Write-in) 0.63%           10 Pat Herlands (Write-in) 8.63%         137 Warren Johnson (Write-in) 10.20%         162 Jennifer Roe (Write-in) 0.44%            7 Write-in (miscellaneous) 2.08%           33

Have We Put The Fools In Charge?

I keep trying to disprove the working hypothesis that the world is run by fools. I have so far not succeeded.

The Swedish diplomat Axel Oxenstierna formulated the concept some 360 years ago in a letter to his son: "Do you not know, my son, with how little wisdom the world is governed?" (in a letter to his offspring written in 1648, in the original Latin An nescis, mi fili, quantilla prudentia mundus regatur?).

The lament seems to apply most especially to the field of economics. Just this past weekend we have seen the European Central Bank pursuing policies likely to destroy the Euro, after first destroying the individual economies of the Euro Zone. In the US, we have had the failure of the "Super Committee."

The latter failure is just as well. Republicans on the committee seemed bent on destroying the US economy. Whether this is from ignorance, ideology, erroneous concepts, or just to make sure Obama's efforts to put people back to work are obstructed, I can't say. Probably all of the above.

No wonder the powers that be have resorted to violence against the Occupy Wall Street movement. OWS was beginning to figure out how the system works.

American Exceptionalism?

Were the police on the campus of the University of California, Davis, exceptionally annoyed? Perhaps they were exceptionally incompetent.

One of the mysteries of the Occupy movement is how, from coast to coast, authorities have acted with disproportionate force to a petty annoyance. A justified petty annoyance, at that, but it hardly matters.

Just more evidence of how little wisdom informs the world's governance.