A senior economist at Citigroup, Willem Buiter, wrote a report in which he argues that there is a 90% chance that Greece will leave the eurozone over the next year to year-and-a-half. Among his observations:
We now believe the probability that Greece will leave EMU in the next 12 – 18 months is about 90 percent, up from our previous 50 – 75 percent estimate, and believe the most likely date is in the next 2 – 3 quarters.
Inspectors from the European Union, European Central Bank and International Monetary Fund will plow through Greece’s books during the next several days. Most experts on Greek finances believe they will find that the nation’s gross domestic product has dropped more quickly than forecast by the government, that its deficit has widened faster and that expenses have not been cut to the levels of austerity agreed upon. If these things are true, Greece may be pushed out before it can decide to leave.
Impressive Volkswagen Sales
The Volkswagen Group posted first half earnings. Despite trouble with European sales, the figures were impressive and show that VW may top General Motors (NYSE: GM) and Toyota (NYSE: TM) in global unit sales in 2012. The Volkswagen Group increased its sales revenue to €95.4 billion in the first six months, up 22.6% on the prior-year period (H1 2011: €77.8 billion). Profit before tax for the first half of the year amounted to €10.1 billion (vs. €8.2 billion), an increase of 22.1% as against the prior-year period. The figure after tax improved by 35.9% to €8.8 billion (vs. €6.5 billion). Audi sales were particularly strong at 678,000, another sign that the brand continues to challenge BMW and Mercedes worldwide. VW summed up the quarter:
Continuing strong demand for Group vehicles around the world saw unit sales by the Volkswagen Group rise 12.4 percent to 4.6 million vehicles (4.1 million) in the first six months. The Group’s share of the global passenger car market increased to 12.4 percent as against 12.3 percent in the prior-year period.
GM and Ford should have been so fortunate in terms of their first half results.
Chinese Investment in the U.S.
Research firm Rhodium Group told CNNMoney that China’s direct investment in the United States may reach a record in 2012. This is despite trade and currency tensions between the world’s two largest economies, and political rhetoric during an election year that has seen both presidential candidates whip China for its trade policies. The total of investments could reach $8 billion, which does not seem like much in the larger scheme of things. CNNMoney reports:
Chinese investors are targeting a variety of American industries for investment. These include advanced manufacturing and oil and gas — led by Sinopec’s $2.5 billion stake in Devon Energy projects. Other industries in focus are renewable energy, aerospace, electronics and banking.
Douglas A. McIntyre