Unemployment in Greece reached 21.9% in March, which allows it to move into the club of EU nations with unemployment rates over 20%. Spain chairs that association. The Greek number was up from 15.7% just one year ago in the same month. As hundreds of thousands of Greeks lose work, the battle over whether the economy can ever be fixed will heat up. So will the belief that money put into Greece by its neighbors and the International Monetary Fund is money wasted. Greece needs to withdraw from the eurozone, some critics say, and go through a period of deep depression to lower the expectations of its citizens, punishing them for past poor economic and financial habits. But the Greek numbers also will spur advocates of stimulus to view Greece as the perfect case for financial aid. That would be the only thing that can save it from an exit from the eurozone, which experts believe could badly damage many of the region’s banks.
No Global Airline Recovery
The global airline industry is nowhere close to recovery, according to the head of its largest trade association. “Oil prices are high, although moderating somewhat from recent peaks. The European sovereign debt crisis is unresolved and we are seeing signs that it is starting to affect Asia’s export-driven economies. And the largely jobless recovery from the 2008 global financial crisis is proceeding at a glacial pace. Passenger demand is strong, cargo is weak and the industry’s profitability remains razor thin,” said Tony Tyler, IATA’s Director General and CEO. The IATA is expected to revise downward its 2012 industry outlook for a $3.0 billion profit on $633 billion in revenues and for a net margin of 0.5%. The news means that carrier consolidations are not over. More and more airlines will seek savings in mergers meant to cut costs. Northwest and Delta (NYSE: DAL) and United (NYSE: UAL) and Continental have already done this in the U.S. US Airways (NYSE: LCC) has expressed interest in buying the American Airlines assets from its bankrupt parent AMR. That does not leave any room for more mergers in the U.S. Too much market share rests with too few carriers.
Food Prices Fall
Food prices, one of the greatest threats to the overall health of the global economy, have fallen recently and dropped very sharply in May, according to the UN Food and Agricultural Organization.
The FAO Food Price Index (FFPI) averaged 204 points in May 2012, down as much as 9 points (4 percent) from April and the lowest since September 2011. At this level, the FFPI would be about 14 percent below its peak in February 2011. International prices of most commodities (composing the FFPI) weakened in recent weeks on generally favourable supply prospects amid growing economic uncertainties and a strengthening US dollar.
The drop not only takes some strain off inflationary pressures in large nations, which include China. It also helps people in the poorest countries where prices have caused an extremely large portion of people’s incomes to go to food, leaving little for shelter, clothing and other basic needs.
Douglas A. McIntyre
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