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Is it Good News?

February 10, 2012 – 6:18 pm

The Greeks apparently have agreed to the frame work of a debt plan with the ECB, IMF and EU. However, before they get the next load of money to bail them out they have to pass the austerity measures or at least pledge, promise or in some way assure the parties lending the money that Greece will actually follow through with the agreement. That will likely happen. Politics in Europe is such that many countries, most importantly, France, want this deal to go through. No one wants the banks in Europe to suffer a massive default on Greek debt. However, the debt bomb in Europe is still ready to explode. It may not, but the danger is very real.

Much of the concern in Europe is about exports and imports. The growth of Europe and the rest of the regions in the world has slowed and will continue to do so. This is affecting China a lot more than the U.S. Countries that focus too heavily on exports will suffer whereas our country which is much more reliant on domestic consumers will feel less pain. In fact the U.S. appears to be gaining strength.

This morning we had U.S. trade numbers for December. Our trade deficit widened as expected as our economy recovers. Our exports grew nicely at 14.5% to $2.1 trillion which was a record while imports increased 13.8%. to $2.7 trillion. It is a good thing when our exports increase at a faster rate than imports. Maybe we can turn the deficit around in the not to distant future as we keep finding excess gas and oil and manufacturing starts to return to the U.S. Yes, Manufacturing is returning to the U.S. However, its a process that will take time.

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