G20 economic growth slows in 2012

The G20 group of leading world economies has reported slower growth in the three months ending in June.

National output as measured by GDP grew at an annual rate of 3% in the second quarter compared with 3.2% in the first quarter, official data showed.

But, economic health varied with China's output growing 7.6% and Italy's shrinking 2.6% due to recession.

Taking global population growth into account, G20 output is effectively stagnating.

Read More at BBC

Soros calls for Germany to 'lead or leave euro'

International financier George Soros has called for Germany to "lead or leave the euro" days before a crucial ruling on the eurozone's bailout fund by Germany's constitutional court.

Mr Soros argued that the eurozone should target 5% economic growth.

That would require the bloc to abandon German-backed austerity measures and accept higher inflation, he says.

He also backed a new European Fiscal Authority financed by VAT receipts to oversee eurozone government finances.

In an article published in Monday's New York Review of Books, Mr Soros said that Germany should become a more "benevolent" leading country or exit the single currency: "Either alternative would be better than to persist on the current course."

Read More at BBC

Europe’s tired engine

After a promising May and June, Steffen Knoop has seen his sales dip by 30%. His small Hamburg-based company, Wascut, sells cooling and cleaning oils for big machines, including those that make cars. “I have a pretty good window on the economy,” he says. Mr Knoop wonders whether the dip is caused by people taking extra long summer holidays or something more serious. Others with a broader and more long-term view of the economic landscape are asking the same question.

Hopes are pinned on Germany as the locomotive that will keep chugging even as large parts of the euro zone go into recession (see chart). As long as Europe’s biggest economy keeps growing, the argument goes, it can gradually pull others out of the mire. Figures released on August 14th duly showed that German GDP grew in the second quarter on the previous one, but only by 0.3%. That was better than in France (no growth at all), Spain (minus 0.4%) and Italy (minus 0.7%). Given its current weakness, can Germany continue to pull its neighbours along?

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Shadow Banks on Trial as China’s Rich Sister Faces Death

When a Chinese court sentenced 28- year-old Wu Ying, known as “Rich Sister,” to death for taking $55.7 million from investors without paying them back, it sparked an unexpected firestorm that has drawn in China’s top leadership.

Her crime involved a common, illegal practice in China: raising money from the public with promises to pay back high interest rates. Known as shadow banking, these underground lending and investing networks are estimated to total $1.3 trillion, according to Ren Xianfang, an economist with IHS Global Insight Ltd. (IHS) in Beijing. That’s the size of the 2011 U.S. government deficit.

Read More at Bloomberg

Spanish Bonds Fall Even as Rajoy Unveils More Budget Cuts

Spain’s efforts to calm investors with 10 billion euros ($13 billion) of budget cuts in education and health failed to stem concerns the nation may be the fourth euro member to need a bailout.

The yield on Spain’s 10-year benchmark bond surged 20 basis points to 5.95 percent today as Economy Minister Luis de Guindos declined to rule out a rescue for Spain and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected.

Spain's Prime Minister Mariano Rajoy during a plenary session at the Spanish Parliament to approve the new conservative government's first batch of austerity measures, in Madrid.

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Greece Faces Bond-Swap Holdouts

ATHENS—The overall participation rate in an unprecedented Greek debt-restructuring deal has exceeded Greece's expectations, a senior finance ministry official said Monday, despite some holders of Greek foreign-law bonds still refusing to take part in the offer.

The official said 97% of the bonds involved in Greece's debt restructuring agreement, which cleared the way for its €130 billion ($173 billion) bailout, have been tendered in the swap, exceeding the 95% target the country was aiming for under the plan.

"We want to achieve a maximum participation from the remaining €6.4 billion still outstanding," the official said.

Read More at The Wall Street Journal

Construction Spending in U.S. Unexpectedly Drops

Construction spending in the U.S. unexpectedly fell in February, reflecting broad-based declines that indicate the building industry will take time to stabilize.

The 1.1 percent decrease, the biggest in seven months, followed a revised 0.8 percent retreat in January that was larger than previously estimated, Commerce Department figures showed today in Washington. The median estimate of 45 economists surveyed by Bloomberg News called for a 0.6 percent increase.

Read More at Bloomberg Businessweek