What’s Important in the Financial World (10/15/2012)

Skepticism About China

The fall-off in China’s factory activity may be beyond what Chinese central government officials have admitted so far. Pockets of pessimism have begun to crop up across the country. Zhou Dewen, who runs a lobbying group in the Wenzhou Provence, expressed deep concern, according to the Financial Times. He said China’s economic trouble is deeper than in 2008, which was at the bottom point of the global recession. Dewen’s comments are the start of a battle between Chinese officials and expert dissenters. China’s official economists continue to insist that GDP improvement will be at least 7.7% this year, with a rise above 8% in 2013. Outsiders and some Chinese businessmen cannot see how this is possible with the recession in Europe and a sharply slowing U.S. economy. These people fairly ask where China’s exports will go and how its factory activity can remain strong with buckling demand among its export partners. There is no positive response the government can give to that question, unless it plans to buy what some factories yield by itself.

Finance Ministers Squabble

Most observers think that the annual meeting of the International Monetary Fund and World Bank exposed the simmering disagreements among the finance ministers of large nations about how the world’s weakening economy can be bolstered. Most of the ministers lectured Europe’s leaders about their lack of resolve to bail out weak nations in the region, and bail them out quickly before the global financial markets make sovereign debt yields unsustainable. Another frequent lecture was aimed at the U.S. Congress and the White House, which are looked at as irresponsible as they let the issues of taxes and a national budget slip to the end of the year, and perhaps beyond. The fiscal cliff, these critics reason, is real and will wreck financial confidence and economic activity. The ministers of developing markets may find that throwing stones at the developed world is a misplaced activity. Whether or not the West is the cause of growth within their own economies, their growth is still slowing, and this needs a solution very soon.

Mature Hollywood Stars

“Taken 2,” a kidnapping movie starring aged Hollywood star Liam Neeson, shows that the market for new films is not driven only by films that feature young actors, vampires or animated characters. “Taken 2” raked in $22.5 million, which took its domestic total to $86.8 million. The movie bested Ben Affleck’s “Argo” at $20.1 million and Ethan Hawke’s “Sinister,” which only sold $18.3 million in tickets. The news bodes well for several movies that will be released over the next few weeks. In the lead among these is the new Denzel Washington movie “Flight,” in which the “well over 50 year old” star plays a pilot with substance abuse problem who miraculously lands a crippled plane. Add Neeson and Washington to stars such as Meryl Streep, Jack Nicholson and Alec Baldwin who can carry a film at the box office just as well as actors under 40.

Douglas A. McIntyre