Why is Europe in such a difficult financial situation? Billionaire George Soros believes he knows. If only Germany would cooperate and offer more support to its weaker neighbors, everything would be OK. That is, of course, if nations like Spain, with its aged infrastructure, 1980s-rooted GDP profile and 26% unemployment could entirely be fixed by Angela Merkel. Soros said in a speech:
The political problem is that Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with it. Germany understandably doesn’t want to be the “deep pocket” for the euro. So it extends just enough support to avoid default but nothing more, and as soon as the pressure from the financial markets abates it seeks to tighten the conditions on which the support is given.
The financial problem is that Germany is imposing the wrong policies on the Eurozone. Austerity doesn’t work. You cannot shrink the debt burden by shrinking the budget deficit. The debt burden is a ratio between the accumulated debt and the GDP, both expressed in nominal terms. And in conditions of inadequate demand, budget cuts cause a more than proportionate reduction in the GDP — in technical terms the so-called fiscal multiplier is greater than one.
Toyota Rejects Ford Claim
Toyota Motor Corp. (NYSE: TM) announced that the Ford Motor Co. (NYSE: F) claim that its Focus was the best-selling car in the world last year is false. This sets up a battle over how the statistics are taken. Toyota used research firm Polk. Maybe Polk’s numbers got its wrong. According to Reuters:
Toyota Motor Corp said on Wednesday its Corolla was the world’s top selling car of 2012, contradicting rival Ford (F.N) which claimed top spot for its Focus model.
Ford said on Tuesday it sold 1.02 million Focus compact cars last year, citing data from automotive consulting firm Polk.
It did not detail Corolla sales in a press release on its website, but various media reports have cited the U.S. carmaker as saying Toyota sold 872,774 Corollas last year.
Toyota’s Tokyo-based spokesman Ryo Sakai said the Japanese carmaker sold 1.16 million Corollas in 2012 and that “Toyota still sees the Corolla as the world’s most popular car”.
J.C. Penney For Sale
The talk about the future of J.C. Penney Co. Inc. (NYSE: JCP) has turned to the chances of a sale. The first possible reason is the value of the firm’s real estate. The second is than another troubled retailer like Sears Holdings Corp. (NASDAQ: SHLD), parent of Sears and Kmart, could buy J.C. Penney and close the underperforming brands of all three. That would leave it as smaller holding company with only successful stores. The problem with the first notion is that J.C. Penney’s real estate holdings are spread across the nation in relatively small parcels. This makes selling them rapidly or for a predetermine price difficult. And price from region to region could vary wildly. The second notion may be even less likely. Sears already has proved that its retail management skills are wanting. Selecting the most successful stores, managing three brands that cater to the low end of the market demographically, and setting layoffs along with related charges would be nearly impossible, even for a well-run company.