Time to rebalance

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  • America’s economy will undergo one of its biggest transformations in decades.
  • - GDP shrank 3,8% - worst drop after second world war Gross Domestic Product
  • Time to rebalance

    1. 1. Greg Ip “TIME TO REBALANCE” The Economist, March 31st Sigrid Sibul
    2. 2. The presentation <ul><li>8 minutes </li></ul><ul><li>Recession in USA </li></ul><ul><li>Cheap oil, easy loans and credit, high salary are not about to return </li></ul><ul><li>Transformation of economics </li></ul><ul><ul><li>Away from consumption and dept </li></ul></ul><ul><ul><li>Towards exports and saving </li></ul></ul>
    3. 3. Old model <ul><li>Recession -> end of the old economic model </li></ul><ul><li>Customers less willing to spend </li></ul><ul><li>Banks less willing to lend </li></ul><ul><li>Customers in dept </li></ul><ul><ul><li>Average from 80% to 129% </li></ul></ul><ul><ul><li>GDP: 70%, 76%, 73% </li></ul></ul>
    4. 4. The Economist, March 31st 2010
    5. 5. Examples <ul><li>Deflated assets </li></ul><ul><li>Tighter credit </li></ul><ul><li>Fewer new homes </li></ul><ul><li>Shranked average home size </li></ul>
    6. 6. Recessions <ul><li>Comparison </li></ul><ul><ul><li>1973-1975 </li></ul></ul><ul><ul><li>1981-1982 </li></ul></ul><ul><li>GDP shrank 3,8% </li></ul><ul><li>Economy might grow 6-8% </li></ul><ul><li>Unemployment falling steadily </li></ul>
    7. 7. Unemployment <ul><li>Surplus buildings, equipment and dept </li></ul><ul><li>Recovery is slow and weak </li></ul><ul><li>High unemployment throughout the country </li></ul>The Economist, March 31st 2010
    8. 8. Economic recovery <ul><li>Higher energy prizes </li></ul><ul><li>Renewable energy </li></ul><ul><li>Imports of the stuff decreasing </li></ul><ul><li>Changed economic geography </li></ul><ul><li>Spending on equipment </li></ul>
    9. 9. Economic recovery <ul><li>Exports – classic route to recovery </li></ul><ul><li>Intel & Brian Krzanich </li></ul><ul><ul><li>Sales down, 3% of employees laid off </li></ul></ul><ul><ul><li>3 billion $ for retooling </li></ul></ul><ul><ul><li>Readiness to produce new cheaper, smaller and efficient chips </li></ul></ul>
    10. 10. Easy days gone for ever <ul><li>“ Worst crisis since the 30s with no end in sight.” – September 18th 2008 </li></ul><ul><li>Mr Hamilton </li></ul><ul><li>Antidote for all happiness and slappy </li></ul>
    11. 11. THANK YOU! Questions!?

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