eyes on the U.S.

Why The US Recovery - And Obama's Hopes - Depend On Good News From Europe

Analysis: It's morning again in America -- for now. Obama's odds on a second term have gotten a boost by good economic news. But the U.S. recovery is linked to the situation elsewhere, notably in downtrodden Europe, still the top consume

Monti and Obama last week at the White House.
Monti and Obama last week at the White House.
Francesco Guerrera

The United States is witnessing a perfect storm of job creation and economic growth. An unexpected mix of low wages, companies with surplus cash and consumers ready to spend again is simultaneously boosting the world's largest economy, offering oxygen to the markets and increasing President Barack Obama's chances of reelection in November.

But without Europe, the storm will not be truly perfect. The U.S. and its president must hope that the relaunch of their economy will not be stopped abruptly by a disastrous crisis or political gridlock. Last week, Obama spoke warmly about European leaders and expressed his great esteem for Italian Prime Minister Mario Monti, who was paying his first visit to Washington as Italian prime minister. The American president's words, however, were also strategic.

In a globalized world, no country is an island. The United States and Europe have deep commercial relations. They are indivisible partners. Of course, their current economies are different: the U.S. is growing, while Europe is sliding back into recession. The U.S. is looking ahead, with tech companies such as Facebook, Google, and Apple. Europe is licking its wounds and facing joyless years of austerity to get its budgets into order.

Nonetheless, the relationship is symbiotic. The American recovery will transform into substantial growth only if Europe manages to avert the worst-case scenario and begin again to buy products and services "Made in the U.S.A."

American numbers are not bad at all. In the last quarter of 2011, GDP rose by 2.8%, the best performance in the last year and a half. Treasury Secretary Timothy Geithner recently said that in 2012 GDP may rise by 3 percent. Of course, it is not at the levels of China or India, but it is indeed much better than Italy or Greece.

The most important data for the White House, though, is the unemployment rate, which has been the Achilles heel of the American economy and Obama's reelection chances. Republicans, and especially frontrunner for the nomination, Mitt Romney, have focused their attacks on Obama around job creation.

But good news arrived last week on this front as well. In January, the unemployment rate dropped to 8.3%, the lowest level during Obama's administration. Over the last five months, the unemployment rate has declined. Analysts predict this trend will continue. This could be crucial for Obama, who will need to win votes in the manufacturing areas of the Midwest, and in the southern states where jobs have vanished in recent decades.

Local recovery, global doubts

During a recent visit to a fire station in Virginia, Obama declared that "the recovery is speeding up" and that, "we can't go back to the policies that led to the recession."

Still, Obama's beautiful rhetoric will be futile if the recovery slows. This is why Europe matters. Much of the good news for the U.S. economy was local. Right now, the companies that have done most of the hiring recently are the local ones: in restaurants and bars, health care, and professional service sectors.

The manufacturing sector, which is one of the main engines of the U.S. economy, has not been part of the recent success. Companies that provide goods instead of services have retrieved just 400,000 of the two million job posts that have been lost since the beginning of the crisis.

Within the manufacturing industry, companies that have done better are those operating on the domestic market. This is the case for Detroit auto giants, which had been written off in 2007-2008.

Chrysler's commercial that aired last Sunday during the halftime of the Super Bowl was the best symbol of Detroit's recovery. Actor Clint Eastwood said in his husky voice, "It's halftime, America. Our second half is about to begin."

But the results don't depend only on America. To keep growing and to reduce unemployment, the U.S. needs to be able to export to Europe, given that Asia doesn't buy as many western products.

But as of now, Italian, Spanish, French and even German consumers are not ready to spend. The economic crisis is forcing governments to introduce austerity measures, and individuals are saving their euros.

This is the transatlantic dilemma. The feel-good factor -- where confidence leads to consumption -- that is driving the recovery in the U.S., is absent in depressed and worried Europe. The perfect storm has yet to cross the Ocean.

Read the original article in Italian

Photo - Italian embassy to U.S.

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Preparing a COVID-19 vaccine booster in Huzhou, China.

Hannah Steinkopf-Frank, Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Ciao!*

Welcome to Wednesday, where Brazil's senate backs "crimes against humanity" charges against Jair Bolsonaro, the UN has a grim new climate report and Dune gets a sequel. Meanwhile, German daily Die Welt explores "Xi Jinping Thought," which is now being made part of Chinese schools' curriculum.

[*Italian]

🌎  7 THINGS TO KNOW RIGHT NOW

• Senators back Bolsonaro criminal charges: A Brazilian Senate panel has backed a report that supports charging President Jair Bolsonaro with crimes against humanity, for his alleged responsibility in the country's 600,000-plus COVID-19 deaths.

• Gas crisis in Moldova following Russian retaliation: Moldova, one of Europe's poorest countries, has for the first time challenged Russia's Gazprom following a price increase and failed contract negotiations, purchasing instead from Poland. In response, Russia has threatened to halt sales to the Eastern European country, which has previously acquired all of its gas from Gazprom.

• New UN climate report finds planned emission cuts fall short: The Emissions Gap Report 2021 concludes that country pledges to reduce greenhouse gas emissions aren't large enough to keep the global temperature rise below 1.5 °C degrees this century. The UN Environment Program predicts a 2.7 °C increase, with significant environmental impacts, but there is still hope that longer term net-zero goals will curtail some temperature rise.

• COVID update: As part of its long-awaited reopening, Australia will officially allow its citizens to travel abroad without a government waiver for the first time in more than 18 months. Bulgaria, meanwhile, hits record daily high COVID-19 cases as the Eastern European's hotel and restaurant association is planning protests over the implementation of the vaccination "green pass." In the U.S., a panel of government medical advisors backed the use of Pfizer COVID-19 vaccine for five to 11-year-olds.

• U.S. appeals decision to block Julian Assange extradition: The United States said it was "extremely disappointed" in a UK judge's ruling that Assange, the founder of Wikileaks, would be a suicide risk of he traveled across the Atlantic. In the U.S., he faces 18 charges related to the 2010 release of 500,000 secret files related to U.S. military activity.

• Deposed Sudan prime minister released: Prime Minister Abdalla Hamdok has been released from custody, though remains under heavy guard after Sudan's military coup. Protests against the coup have continued in the capital Khartoum, as Hamdok has called for the release of other detained governmental officials.

Dune Part 2 confirmed: The world will get to see Timothée Chalamet ride a sandworm: The second installment of the sci-fi epic and global box office hit has officially been greenlit, set to hit the screens in 2023.

🗞️  FRONT PAGE

Front page of the National Post's October 27 front page

Canadian daily National Post reports on the nomination of Steven Guilbeault, a former Greenpeace activist, as the country's new Environment minister. He had been arrested in 2001 for scaling Toronto's CN Tower to unfurl a banner for Greenpeace, which he left in 2008.

📰  STORY OF THE DAY

Chinese students now required to learn to think like Xi Jinping

"Xi Jinping Thought" ideas on socialism have been spreading across the country since 2017. But now, Beijing is going one step further by making them part of the curriculum, from the elementary level all the way up to university, reports Maximilian Kalkhof in German daily Die Welt.

🇨🇳 It's important to strengthen the "determination to listen to and follow the party." Also, teaching materials should "cultivate patriotic feelings." So say the new guidelines issued by the Chinese Ministry of Education. The goal is to help Chinese students develop more "Marxist beliefs," and for that, the government wants its national curriculum to include "Xi Jinping Thought," the ideas, namely, of China's current leader. Behind this word jam is a plan to consolidate the power of the nation, the party and Xi himself.

📚 Starting in September, the country's 300 million students have had to study the doctrine, from elementary school into university. And in some cities, even that doesn't seem to be enough. Shanghai announced that its students from third to fifth grade would only take final exams in mathematics and Chinese, de facto deleting English as an examination subject. Beijing, in the meantime, announced that it would ban the use of unauthorized foreign textbooks in elementary and middle schools.

⚠️ But how does a country that enchants its youth with socialist ideology and personality cults rise to become a world power? Isn't giving up English as a global language the quickest way into isolation? The educational reform comes at a time when Beijing is brutally disciplining many areas of public life, from tech giants to the entertainment industry. It has made it difficult for Chinese technology companies to go public abroad, and some media have reported that a blanket ban on IPOs in the United States is on the cards in the next few years.

➡️ Read more on Worldcrunch.com

📣 VERBATIM

"I'm a footballer and I'm gay."

— Australian soccer player Josh Cavallo said in a video accompanying a tweet in which he revealed his homosexuality, becoming the first top-flight male professional player in the world to do so. The 21-year-old said he was tired of living "this double life" and hoped his decision to come out would help other "players living in silence."

🇸🇩💥  IN OTHER NEWS

Why this Sudan coup d'état is different

Three days since the military coup was set in motion in Sudan, the situation on the ground continues to be fluid. Reuters reports this morning that workers at the state petroleum company Sudapet are joining a nationwide civil disobedience movement called by trade unions in response to the generals' overthrow of the government. Doctors have also announced a strike.

Generals in suits At the same time, the military appears firmly in control, with deposed Prime Minister Abdalla Hamdok allowed to return home today after being held by the coup leaders. How did we get here? That's the question that David E. Kiwuwa, a professor of international relations at the University of Nottingham, takes on in The Conversation:

"Since the revolution that deposed Omar el-Bashir in 2019, the military have fancied themselves as generals in suits. They have continued to wield enough power to almost run a parallel government in tension with the prime minister. This was evident when the military continued to have the say on security and foreign affairs.

Economy as alibi For their part, civilian officials concentrated on rejuvenating the economy and mobilizing international support for the transitional council. This didn't stop the military from accusing the civilian leadership of failing to resuscitate the country's ailing economy.

True, the economy has continued to struggle from high inflation, low industrial output and dwindling foreign direct investment. As in all economies, conditions have been exacerbated by the effects of COVID-19. Sudan's weakened economy is, however, not sufficient reason for the military intervention. Clearly this is merely an excuse."

➡️ Read more on Worldcrunch.com

#️⃣  BY THE NUMBERS

471 million euros

Rome's Casino di Villa Boncompagni Ludovisi, better known as Villa Aurora, will be put up for auction in January for 471 million euros ($547 million). The over-the-top price tag is thanks to the villa having the only known ceiling painting by Renaissance master Caravaggio.

✍️ Newsletter by Hannah Steinkopf-Frank, Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Who wants to start the bidding on the Caravaggio villa? Otherwise, let us know what the news looks like from your corner of the world! info@worldcrunch.com!

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