With the Labour Party in the United Kingdom choosing a leader comes the argument by a former Blair and Brown 'Downing Street Advisor' that there is no choice but that between Anglo-American capitalism or continental Europe's model of social justice.

Why? It does not seem so to us.

Brian of Victoria, a regular enough reader of this site to monitor its moods, wondered whether or not there had ever been so downbeat a period about the economy and markets. We managed to find a thinly supported bullish view on US large cap stocks but still the mood is very grim, with reason.

Deutsche Bank has done a useful piece of research on Chinese consumers -- some great factoids -- and Michael Pettis has a long companion piece on the same topic.

The Obama spin is bad, some samples. In the recurring nightmare category, an article on Israeli and Palestinian negotiations, and a doctor in Alberta dares to suggest an alternative to the current pricing policies in the Canadian health care system. An analysis of the US job market confirms what we know, the new job normal is not pretty.

And Michael Ignatieff takes dead aim at Jack Layton with the latter's refusal to whip his caucus to vote against the Long Gun Registry's demise.

Is the excellent future of high income countries like the United Kingdom and Canada hostage to the 'either or' of free market capitalism and policies of social justice?

This article in the Financial Times makes that case.

As the ballot papers go out in Labour’s leadership contest, it is difficult to exaggerate how underwhelming the campaign has been. http://www.ft.com/cms/s/0/5d87e862-b534-11df-9af8-00144feabdc0.html?ftcamp=rss&ftcamp=crm/email/201091/nbe/Comment/product

We would argue that this is a very narrow way to frame the debate because of the argument that the market and social justice are two sides of the same coin.

'Prosperity and Justice: A New Canadian Democracy', Paul Summerville http://archive.ndp.ca/page/1673

Here you go Brian. Sadly the analysis is not great but the tone is positive.

The common view seems to be that the weak stock market reflects a weakening economy.   http://www.ft.com/cms/s/0/40d69234-b518-11df-9af8-00144feabdc0.html?ftcamp=rss&ftcamp=crm/email/201091/nbe/Comment/product

Meanwhile in Japan.

Pessimism in Japan saw the Nikkei 225 tumble 325.20 points, or 3.5pc, to close at 8,824.06 as investors worried about the impact of a US slowdown on the strong yen and falling prices. Other major Asian markets also retreated. http://www.telegraph.co.uk/finance/markets/7972991/Global-markets-slide-as-3.5pc-Nikkei-fall-heightens-fears-ahead-of-more-US-data.html

Just for the record, in December 1989 when I signed my contract with Jardine Fleming Securities (Tokyo) as chief economist covering Japan the Nikkei was well over 39,000. Today it closed at just under 9,000.

That is a 30,000 point reversal over 20 years or a 75% wealth evaporation.

The US–economy has not experienced sustained deflation since the Great Depression of the 1930’s, when consumer prices fell 10% between 1929 and 1933. But Japan has been battling falling prices since 1995, – triggered by the bursting of the Nikkei–225 equity bubble, and a unrelenting slide in land prices.  http://www.telegraph.co.uk/finance/markets/7972991/Global-markets-slide-as-3.5pc-Nikkei-fall-heightens-fears-ahead-of-more-US-data.html

 

Are you ready for ten years of nothing?

SOMETIMES distance can lend perspective to the view.     http://www.economist.com/blogs/buttonwood/2010/08/stock_markets_economy_and_qe&fsrc=nwl

With Japan's 20 year (and counting) deflation as the worst case, all eyes on Ben.

President Obama called an end to combat operations in Iraq Tuesday and said the focus is now on getting America’s economy back on track. http://www.cnbc.com/id/38949155

Sorry Brian. Why financial crises can take fifty years to recover from.

The widespread banking crises in advanced economies and more recently the “near” default of Greece have dashed the popular notion that rich countries have outgrown severe financial crises.  http://www.voxeu.org/index.php?q=node/5450

A very good research piece by Deutsche Bank quantifying the importance of Chinese consumers. Of note, the report compares the 50 million urban Chinese with annual incomes over $US10,000 to the entire population of South Korea. PDF file below.

Michael Pettis on Chinese consumers.

Have We Underestimated Chinese Consumption? http://mpettis.com/2010/08/have-we-underestimated-chinese-consumption/

The spin on President Obama is that he misjudged the importance of the economy and the structurally weak job market, and that he is now a first-term lame duck boxed in by the coming mid-term elections. Thanks to Tony of Victoria for sending this in.

Barack Obama was "incredulous" at what he was hearing, said one of his top economic advisers.  http://readersupportednews.org/news-section/80-80/2833-how-obama-got-rolled-by-wall-street

It's not that any reasonable person could actually think that anyone could do a worse job than George W. Bush that must concern President Obama, it is that reasonable people are writing it.

The President's problem is not that he inherited a set of disastors but how he is seen to have managed through them.

In November, George W. Bush will publish a memoir, Decision Points, in which he will try to put the tough moments of his presidency into perspective. http://www.slate.com/id/2265539/

And foreign policy too.

Is it better to be a sucker? http://online.wsj.com/article/SB10001424052748703369704575461283206035848.html

The endless debates.

The Middle East.

Say what you will about the Arab world, it's hard to earn its gratitude. President Obama went to Egypt and not Israel. He demanded that Israel cease adding new settlements in the West Bank.  http://www.washingtonpost.com/wp-dyn/content/article/2010/08/30/AR2010083003775.html?wprss=rss_opinions

 

Related.

As preparations intensify for a Palestinian-Israeli summit meeting in Washington on Thursday, the crude outlines of a Palestinian state are emerging in the West Bank, with increasingly reliable security forces, a more disciplined government and a growing sense among ordinary citizens that they can count on basic services.  http://www.nytimes.com/2010/08/31/world/middleeast/31mideast.html?_r=2&nl=todaysheadlines&emc=globasasa21

Canadian health care reform.

An Alberta physician ... http://www.nationalpost.com/todays-paper/rich+jump+health+care+queue/3467096/story.html

Our view on the US economy is simple.

A new financial technology -- securitisation -- created a parallel credit universe whose spectacular growth distorted the real economy for over two decades specifically in finance, real estate, and consumption.

The economy will take a decade to recover from this tremendous distortion and this will be reflected in a job market where unemployment trends higher and wages lower.

Good study on US labour market. PDF below.

After being out of work for more than a year, Donna Ings, 47, finally landed a job in February as a home health aide with a company in Lexington, Mass., earning about $10 an hour.  http://www.nytimes.com/2010/09/01/us/01jobs.html?nl=todaysheadlines&emc=globasasa29

 

Michael Ignatieff takes dead aim at Jack Layton over the Long Gun Registry.

Michael Ignatieff has been advised not to pick any fights with Stephen Harper’s Tories that may provoke an election, but clearly the NDP is fair game.  http://www.theglobeandmail.com/news/politics/ottawa-notebook/michael-ignatieff-accuses-jack-layton-of-policy-theft/article1692370/

Jeffrey Simpson on Jack's dilemma.

NDP Leader Jack Layton is a good man with a political problem: the long-gun registry that the Conservatives want to abolish. http://www.theglobeandmail.com/news/opinions/how-the-long-gun-registry-shot-a-wedge-into-the-ndp/article1690546/?cmpid=rss1

But the real danger for the Federal NDP is not the anti-evidence based really dumb Harper public policy spin or the law and order spin but the anti-women angle remembering that the registry was born out of the misogynist montreal murder of 14 women http://archives.cbc.ca/society/crime_justice/topics/398/.

This also gives the story an anti-Quebec angle.

Lose-lose.

Oh for a quiet life, Jack Layton thinks as he shuffles about asking his members to please vote to support the national long-gun registry because if they don’t, he’ll be remembered as the guy who finished it off. http://www.thestar.com/opinion/article/855091--mallick-jack-layton-and-guns-i-ve-had-enough