Round The Globe: Growth In China, India - Rate Hikes in Eurozone - Torture In USA

Friday, November 18, 2005

My daily virtual journey around the globe results today in four highlights. If you are looking for growth, turn to China and India. If you want higher rates, go to Europe. And when you are looking for negative news, the USA is the place to be.
Let me start off with the good news.
Chinadaily reports today that the Chinese National Bureau of Statistics expects 8% GDP growth for the next 15 years. From Chinadaily:
During the next five years, China's economy will keep an annual growth rate of 8.5 percent, and by 2010, China's gross domestic product (GDP) is expected to exceed 26 trillion yuan (3.2 trillionUS dollars), with per capita GDP 19,000 yuan, he said.
From 2010 to 2015, China's GDP is expected to grow at an annual rate of 8 percent, and by 2015, China's GDP is to exceed 42 trillion yuan, with per capita GDP reaching 30,000 yuan (more than3,000 US dollars), he said.
From then on, China will be among the richer ones of middle-income countries according to the 2004 standard of the World Bank, he said.
According to his estimation, by 2020, China's GDP is expected to exceed 60 trillion yuan, with a per capita GDP of over 40,000 yuan.
India is not far behind. Finance minister Chidambaram is quoted in Indiadaily that India's economy will grow 7% in the current fiscal year. From Indiadaily:
India's gross domestic product (GDP) growth will surpass seven per cent in the current financial year, Finance Minister P Chidambaram said on Friday.
Speaking at "Bancon 2005'' here, he said the farm sector, unlike last year, had shown a smart pick up and industrial growth has strengthened along with the services sector.
In this context he said the outlook for the Indian economy looked bright, adding that GDP growth is expected to be over seven per cent this fiscal.
Replying to queries, the Finance Minister said the rupee is not weak. "The rupee has appreciated against Pound, yen and the Euro".
"The rupee has nominally depreciated against the dollar and in real effective exchange rate (ReeR) terms, the number stands at 108", Chidambaram said, adding that this does not show that the rupee is weak.
On other macro-economic issues, he said an inflation of five per cent is unavoidable due to the rise in fuel prices.
The Eurozone meanwhile gets prepared for higher interest rates while growth expectaions remain sluggish. ECB president Jean-Claude Trichet said at the European Banking Congress in Frankfurt,
after two and a half years with very low interest rates I think that the governing council is ready to decide on an interest rate change. (translated from the website of the German daily Frankfurter Allgemeine.)
Analysts are expecting that the ECB will hike the leading overnight rate by 25 basis points to 2.25%.
Yesterday the EU had published its growth forecasts for 2006. The EU sees 1.9% growth in the Eurozone and a little more in the EU25 area.
A place where everything seems to go wrong these days is the USA. English TV station ITV cites US Admiral Stansfield Turner who labelled Dick Cheney "a vice president for torture."
From ITV's website:
A former CIA director has claimed that torture is condoned and even approved by the Bush government.
The devastating accusations have been made by Admiral Stansfield Turner who labelled Dick Cheney "a vice president for torture".
He said: "We have crossed the line into dangerous territory".
The American Senate says torture should be banned - whatever the justification. But President Bush has threatened to veto their ruling.
The former spymaster claims President Bush is not telling the truth when he says that torture is not a method used by the US.
Speaking of Bush's claims that the US does not use torture, Admiral Turner, who ran the CIA from 1977 to 1981, said: "I do not believe him".
On Dick Cheney he said "I'm embarrassed the United States has a vice president for torture.
"He condones torture, what else is he?".
Admiral Turner claims the secret CIA prisons used for torture are known as 'black sites', terror suspects are picked up in places like Afghanistan and Pakistan.
They are flown by CIA-controlled private aircraft to countries where there are secret interrogation centres, operating outside any country's jurisdiction.
No one will confirm their locations, but there are several possibilities: The Mihail-Kogalniceanu military airbase in Romania is believed by many to be one such facility.
Admiral Turner's remarks were echoed by Republican Senator John McCain, himself a victim of torture in Vietnam.
He said torturing to get information was immoral, was not effective and encouraged potential enemies to do the same to Americans.
So where does all this leave is investment-wise? Long Asia, short USA, flat Europe and buy gold at the next correction at levels around $470-475 an ounce.
In a historical context it has to be noted that regimes who turned to torture have never been around much longer after the beginning of their ventures into disrespecting human rights and the Geneva conventions.
In the 20th century this was the case with Hitler whose empire for 1000 years came down after 13 years of horror. The same happened to Argentina's junta in the early 1980s and Serbia in the 1990s. See also the post "Growing Similarities Between US Government And Nazi Regime - A Historical Comparison."


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