UN Predicts Grim Economic Outlook for 2012

The world economy is on the brink of another recession and prospects for recovery will worsen unless the international community can strengthen cooperation, says the UN’s 2012 Report on World Economic Situation and Prospects.

“We have a situation where we may well be at risk of a double dip. In any case it is very likely there will be a further slow down.” says Jomo Kwame Sundaram, UN Assistant Secretary General for the Department Economic and Social Affairs (DESA).  

Sundaram and DESA director for policy and analysis Rob Vos where at the UN to preset an overview of the report, which will be released in the new year.

Sundaram says today’s announcement by China that its manufacturing sector had shrunk over the recent period is an ominous sign, especially for developing countries that for the most part had continued to do reasonably well during most of the crisis.

“We do not have the basis for a strong recovery in the developed world and what is likely to happen in the near future is the further deterioration of conditions in the developing world.” he said. “This current situation, in the view of the Chinese, is worst than the last quarter of 2008.”

Sundaram says the international community has so far failed to take collective action and adopt preventive measures to ensure possible future European debt problems can be contained. 

He says the complex political relationship between European national governments and the European Union framework, along with ideological differences between the White House and Congress have seriously limited any international consensus to addressing the crisis.

Rob Vos, Director of Policy and Analysis at DESA, says even in a best case scenario global economic growth will drop. 

“We project that the world economy could grow to 2.6% next year, that’s slightly down from 2.8% but that is already a pretty strong deceleration from what happened in 2010 when the world economy was growing at 4 percent.” 

Vos says projections are based on the assumption the European debt crisis will not reach the EU’s larger economies. But with both Italy and Spain coming under increased financial pressure, he says the worse case scenario is quite likely.

The report’s forecast also depends on Congress and the White House agreeing on the extension of payroll tax cuts and emergency borrowing benefits.

“If those two actions don’t happen, we estimate that the US economy could further slow by another one percentage point of growth next year, which would be further down from already slow growth of 1.7%.”

Vos says the US should also start thinking about short term stimulus measures to avoid an increase in home foreclosures, which he says continues to undermine the health of the banking sector and negatively impact the economy.

“There is weaknesses and some dangers in the mortgage market that because of the high unemployment, a lot of the home’s are underwater so to speak, that their debts are higher than the value of their homes, that there may be a need to give people more bridge loans to overcome those problems and to avoid more foreclosures.”

House Dems Want Infrastructure, Transportation Materials Made In US

By Andrea Salazar

The San Francisco-Oakland Bay Bridge may be located in the United States, but parts of it are stamped, “Made in China.”

To combat the loss of manufacturing jobs to China, House Transportation and Infrastructure Committee Democrats announced Thursday the introduction of a bill tightening the requirements for investments in infrastructure and transportation.

The Invest in American Jobs Act, sponsored by Rep. Nick Rahall (D-W.Va.), would mandate that all materials used in infrastructure and transportation projects funded by U.S. taxpayers be made in the United States.

“Made in China but paid for by American tax payers,” Rahall said referring to the Chinese materials and man-power used in replacing a part of the Bay Bridge. “We are no longer just buying cheap trinkets from China, we are literally buying bridges and major transportation infrastructure, while outsourcing innovation and capabilities that could be fostered and strengthened right here in the U.S. of A.”

Rep. Peter DeFazio (D-Ore.) echoed those sentiments and challenged Republicans in the House to pass the bill as part of a transportation bill expected in January, warning that otherwise “the jobs that you are going to tout that you’re creating with this bill are going to be created in other countries, not for American workers.”

Representatives from the AFL-CIO, United Steelworkers and United Streetcar also joined Rahall and other committee members in support of the Invest in American Jobs Act at a news conference Thursday.

Rahall told reporters that the bill’s reception has been “not negative,” adding that the bill is important because “when we make it in America, more Americans can make it.”

Senate Duo Accuses China Of Manufacturing Counterfeit Products

By Mike Hothi

Sen. Carl Levin (D-Mich.), Chairman of the Senate Armed Services Committee, announced Monday that, following a Committee investigation, China is responsible for a large amount of counterfeit goods that are integrated into United States military equipment.

The results of a Senate Armed Services Committee investigation into counterfeit electronic parts showed that over 70 percent of counterfeit goods used by the Defense Department’s supply chain come from China. 

“We are going to take action to stop the flood of counterfeit parts at the source and that source is mostly China,” Levin said.

According to the Michigan Democrat, China has, to this point, been uncooperative with the investigation.

“If China will not act promptly, then we should treat all electronic parts from China as suspected counterfeits,” said Levin.

This would mean requiring inspection at all ports that house Chinese electronics. Levin said that the costs of these inspections would be levied on the shippers.

Sen. John McCain (R-Ariz.) echoed Levin’s concern of the Asian country saying that “we need to realize that this issue is part of a broader challenge we face in our relations with the People’s Republic of China. The fact is that it’s falling short in certain important areas of its obligations as a responsible stakeholder in the international system.”

McCain and Levin have been critical of China as of late for failing to prevent counterfeit materials from entering the supply chain. Counterfeit goods pose a threat to US military personnel who rely on this shoddy equipment to carry out their duties, the Senate duo argued.

The Committee is scheduled to hold a hearing Tuesday that will reveal more details about China’s reluctancy to participate in the investigation.

Senators Urge House To Pass China Currency Bill

By Andrea Salazar

A day after the China currency bill passed the Senate, a bipartisan coalition of senators urged House Speaker John Boehner (R-Ohio) and the White House to join them against China’s currency manipulation. 

“China has a callous disregard for the rule of law,” Sen. Lindsey Graham (R-S.C.) said. “They cheat at every turn. They steal intellectual property, they counterfeit goods affecting our defense industries and they manipulate their currency. We don’t have this kind of discussion with normal nations. We don’t have this kind of discussion with democracies. You’re having this kind of discussion with a communist dictatorship with a command and control economy that’s acting like the mob.”

Graham echoed those sentiments and dismissed worries about China’s reaction to the currency bill.

“I’m not worried about the Chinese response because at the end of the day they need us as much as we need them, if not more so,” Graham said. “I’m worried about the idea that American politicians are going to let threats coming from China stop what, I think, is a rational approach to dealing with this.”

Sen. Chuck Schumer (D-N.Y.) said he expects the bill to pass, despite opposition from leadership.

“We have tried to keep this as non-political, frankly, as possible,” Schumer said. “That’s because we believe in this. I just believe in my bones that this is one of the five ways… to keep America number one over the next several decades.”

Pelosi: U.S. In Abusive Relationship With China

By Andrea Salazar

House Minority Leader Nancy Pelosi (D-Calif.) Thursday urged Congress to tackle the China currency manipulation bill before dealing with trade agreements.

“I can say flat out, with all the respect that I have for the people of China, with all the importance I place in our relationship and the fun I had digging to China when I was a child on the beach…we are in an abusive relationship with China when it comes to trade,” Pelosi said.

Speaking to reporters at her weekly briefing, Pelosi said Congress should pass the Currency Exchange Rate Oversight bill “not to be protectionist but to be self reliant.”

The minority leader also commented on the supercommittee, asking them to “have as its centerpiece an initiative for growth, for innovation, for entrepreneurship” because “creating jobs through the private sector, through the small business is the way to better the economy.”

As a representative from California, she also spoke about Steve Jobs’ death calling him a “visionary genius” who was able to connect with different generations.