OECD: Positive Global Growth

Today the OECD (Organisation for Economic Co-operation and Development) has published its release showing that its 30 members have emerged from the recession; this is the first time that the OECD economies have expanded since the first quarter of 2008. As I have stated in my last post, the Britain economy is the only country in Europe still contracting his economy, another confirmation of this bad trend come from the OECD stating that UK was the only G7 country not to grow in the quarter. The Eurozone grew 0.4%, while the US expanded by 0.9%. I have taken in consideration various newspapers in order to analyze how they communicate the news and with which kind of emphasis.

The first article is from BBC news that it use its typical structure to communicate the news. The first part is providing an overview, stating facts and figures: “Japan delivered the strongest growth, expanding by 1.2%, while the UK posted the weakest, contracting by 0.4%”. This strategy enable the readers to have a wider idea of what it is explaining and moreover to give them the chance of a better understanding of the second part that usually is based on a specific issues regarding the argument. In this case the second part is discussing about the effect of the unemployment from this “actual” recovery, the outcome is not positive at all: “however, it predicted that even with the return to growth, unemployment rates will continue to rise until the end of next year”. It is really clever in my opinion writing about this kind of consequences because due to its ambiguous and strange outcome could generate curiosity and therefore attracting more readers. At the end I always appreciate their clear and objective style of writing that provides the reader with a good generalist overview of the news with a brief article.

After this, I have analyzed an article from the Wall Street Journal. For the first since I am reading this newspaper, I did not appreciate the way is written and explained the article. Usually the WSJ is a specific financial newspaper that is providing detailed information with technical and deep analysis; in this case this article is really similar to the previous one or even worst. It is absolutely too short and not with a level of accuracy that characterized this newspaper, it is just giving a brief idea of the figures released by the Organization for Economic Cooperation and Development and nothing else. If I wanted to read a brief article I would have preferred Reuters or a simple daily newspaper.

The last article is from the Times and it has to be considered the most accurate and detailed out of the all three newspapers. It is noticeable from the title “UK economy is the 'sick man' as rivals recover” that is empathizing the bad economic results of Britain and could be interpreted as a critic to the strategies adopted by the government. It is a well structured article, beginning with fact and figures: “the 30 countries in the OECD had shown no economic growth in the second quarter, but recorded growth of 0.8 per cent in the third quarter”. Then analyzing in details the argument: “The eurozone’s dominant service sector grew at its fastest pace in two years in November, with Markit’s Index of activity rising to 53.2 in November, from 52.6 in October, to reach its highest since November 2007”. Concluding with future forecast from economists “However, analysts remained cautious about the outlook for the eurozone.”. The best and complete article taken into consideration in my analysis.

In conclusion I would like to state that this kind of figures does not give us the real situation of the economy because are not taking in consideration a vast variety of variable aspects that could bring us back into the crisis. These variable aspects could be: high level of unemployment or high level of debt of companies. Therefore they are positive signs that have be considered as a starting point and not as an arrival.

BBC News:

http://news.bbc.co.uk/1/hi/business/8374042.stm

Wall Street Journal

http://online.wsj.com/article/SB125897414003560355.html

Times:

http://business.timesonline.co.uk/tol/business/economics/article6928233.ece

Growing European economies leave Britain lagging

Two weeks ago I wrote about the difficult economic situation in United Kingdom, focusing on different aspects that are impeding UK to overcome the crisis and begin a process of full recovery; in past day in the major newspapers was published the European economics results that show good reaction from the crisis and give a positive impression for the future.

The Financial Times article is clear and straight forward transmitting all the key facts and figures to the reader in order to let them understand the topic: “Euro zone gross domestic product expanded by 0.4 per cent compared with the previous three months, after having previously contracted for five consecutive quarters, according to official figures on Friday”.

The first part is focusing on broad description of the results comparing Euro zone with United Kingdom and US: ” The US economy expanded by 0.9 per cent in the third quarter, although the UK was still in recession”. The main body of the article is describing the temporary factor that have brought European countries to this positive results: “So far the Euro zone recovery has been driven by temporary factors – less aggressive de-stocking by industry and emergency stimulus measures – as well as a pick-up in exports on the back of stronger global demand”. Another highly important issue raised in the article is the opinion and forecast from major macroeconomics bodies such as the International Monetary Fund, European commission; all these institution are warming from excess of positivism: “if the banking sector does not repair its balance sheet, the credit channel is likely to remain impaired, posing a major downside risk to the sustainability of the recovery”.

The Guardian s approach to the news is completely different, it focus more on the comparison between United Kingdom and Eurozone without explaining in deep and with accuracy the results.

Most of the article is based on interviews with different economists and politicians that are all explaining their point of view and forecast for the future; The Conservatives seized on the data to criticise government policies. "Far from 'leading the world out of recession' as Gordon Brown has claimed, the evidence shows how his economic policies have failed," said shadow chancellor, George Osborne or Vince Cable, the Liberal Democrat Treasury spokesman, said the data was further evidence of how hard Britain has been hit by the financial crisis “"While in the short term the combination of a weak pound and a return to growth in the Euro zone is good for our exporters, consumers will feel the pinch from the increasing cost of imports”.

At the end there are some forecast from economists warning from celebration and to continue to work hard because “ The economy remains in a fragile state, and is recovering mainly because of government stimulus and temporary inventory effects. A sustained recovery is likely to require that consumer spending and business investment be the primary drivers of new economic activity."

The main difference with the financial times is the objectivity and awareness of communicating the news; the Guardian is not clear structured and does not appear to give a wide explanation of the fact. In my opinion it wanted to show the EU positives figures in despite of UK, therefore accuse Gordon Brown policies and strategies in order to arise in the reader a sentiment of anger and revenge; that strategy is a simple strategy to sell more copies.

The last article taken into consideration is from The Times that uses a third different approach to the news. It is focusing on the best country that has reacted to the crisis in order to analyze the facts and figures: “Germany, the zone’s biggest economy, confirmed its recovery, after exiting recession in the second quarter, when it said that GDP increased by 0.7 per cent in the third quarter. France also underlined its recovery, with 0.3 per cent growth.” The rest of article is mainly the same of the other two articles; using interviews to justify this result in comparison with the UK and to forecast future prospects.

Europe is recovering from the crisis thanks to the right strategies undertaken from the different governments and thanks to all the workers that in this period have worked double to help their countries to overcome this difficult period.

All of us are hoping that this is a sustainable recovery based on real economy and not just on stimulus packages and illusions. The governments have the chance to regain the trust of the citizens, are they working to do so? I really hope so.

Times:

http://business.timesonline.co.uk/tol/business/economics/article6915468.ece

The Guardian;

http://www.guardian.co.uk/business/2009/nov/13/eurozone-growth-beats-uk-recession

The Financial Times

http://www.ft.com/cms/s/0/08ab0f42-d02c-11de-a8db-00144feabdc0.html

Allianz back in profit as sales beat forecasts

The actual situation in the economy, it is really confused, there is no right forecast or assumption in order to determine whether the market is recovering or is still in the crisis.

Every week reading the financial news, it is easy to have different impressions and point of view depending of which article is taken into consideration. After several weeks of writing different post, I realized that usually on averages the news, coming from a macroeconomics aspects, are often negative regarding the economy; on the other side generally in this period news regarding the quarter results are showing the positive effect of the recovery on companies.There is a contradiction that is showing the different way of interpreting the actual situation; this week and decided to critically analyze the news of Allianz ‘s quarter results.

The Wall Street Journal uses its classical approach to the news; objectivity and awareness about the facts and figures.

The article is well structured and gives a clear idea of what are the reasons of this incredible result. In doing so it uses key elements of the financial statement such as operating profit or total revenue in order to give to everyone, not just to specialized readers, the chance to understand the financials data of the article: “Net profit for the three months to Sept. 30 was €1.32 billion ($1.96 billion), compared with a loss of €2.02 billion a year earlier. The year-earlier figure included a €2.6 billion hit from its Dresdner Bank arm, which the company sold to Commerzbank AG for around €5.1 billion in the first quarter” or “Operating profit in the third quarter rose 23% to €1.93 billion from €1.56 billion, boosted by strong contributions from its life-health insurance and financial services businesses”.

The second part is dedicated to the forecast and historical company with 2008 with citation of the Chief Financial Officer words regarding future prospects of the company: “Allianz is well capitalized and prepared for delivering solid earnings even in the challenging market environment ahead, due to its high-quality investment portfolio and conservative risk management approach.”

The second of article taken into consideration is from Bloomberg. The news is divided in three parts focusing of major aspects: the introduction, not yet satisfactory and solvency ratio.

All three are mainly based on interviews of executives or specialized analyst of the market.

The introduction gives a wider idea of the news showing and explaining key figures and facts citing Allianz declaration: “Reliable statements about future profit levels aren’t possible, Allianz said citing risks to the economic recovery and capital market volatility”. It is possible to notice from this part the objectivity and complexity of this article; Bloomberg give insight of the market to specialized readers that want technical analysis and explanations.

The last two parts analyse the most important aspects to be taken in consideration: “We achieved a reasonable result in the property and casualty business, given the still challenging market environment, but the operating result isn’t yet satisfactory,” said Chief Financial Officer Oliver Baete and “Allianz is “well capitalized” with a so-called solvency ratio, a measure of its ability to absorb losses, of 164 percent, including the dividend accrual”.

The last article is from the Il Sole24ore, the Italian specialized financial newspaper. Il Sole24ore could be compared to Reuters in somehow in this type of news. Both news are reliable and well written giving a wider idea to reader about the topic; they never enter in details or explanation. Therefore it could be considered a quick flash of the news, well structure with all key elements.

Allianz is the example of good strategy to overcome the crisis; it has sold Commerzbank that was losing money in order to avoid bankruptcy and to focus on the core business insurance. Companies should focus on core business and sell not pertinent business, in my opinion it is fundamental to focus “on what it could be done better and more efficiently”.

Wall Street Journal:

http://online.wsj.com/article/SB125775073100937989.html?mod=googlenews_wsj#articleTabs%3Darticle

Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601100&sid=a5JZ_.5_pFgk

Il Sole24ore

http://www.ilsole24ore.com/art/SoleOnLine4/Finanza%20e%20Mercati/2009/11/Allianz-trimestre.shtml?uuid=77d70d46-cd0a-11de-855c-28baee80fb19&DocRulesView=Libero

Reuters:

http://uk.reuters.com/article/idUKL940580420091109

EU unemployment worst since 1999

The majority of the economists are assuming that the crisis is over and the world economy is recovering, nobody has secure empirical evidence in order to ensure and add value to their thesis. One aspect this week seems quite clear: European economy is facing the consequences of the financial crisis in form of unemployment. This recession has changed the world and the job market with it, it will delay the recovery limiting the consumer spending on goods and services.

The first article on the topic that I have taken into consideration is from the Wall Street Journal; it is absolutely the best article in terms of clarity, objectivity and awareness on the topic. From the first few paragraphs it is giving a clear way of viewing and interpreting the news with facts and figure; the first sentence of the article is explanatory of my point of view and a clear statement of the actual European economy: “with job losses continuing to mount, euro-zone consumers are unlikely to support the currency area's nascent recovery by spending heavily in the months ahead”. The second part of the article is dedicated to the interviews that state what will happen in the following months: "Underlying inflationary pressures are likely to remain extremely low for some considerable time to come due to large output gaps, intense competition, high and rising unemployment, and the strong euro, "There is no room for complacency, particularly in view of the increase in unemployment levels…The incipient recovery needs close monitoring and the supporting policies should not be withdrawn until the recovery is fully secured."

This newspaper uses always the same technique to communicate the news: being direct, clear and precise in order to give the readers the possibility to create its own ideas.

BBC News uses a completely different approach to the news: the entire article is based on numbers and comparison between different countries. The use of subtitle makes the structure clearer and more comprehensive to the reader, it mainly focus on three aspects: youth unemployment, future forecast and the risk of inflation. As the article from the WSJ, they have interviewed various economists to have a wider idea of what will come after: "The unemployment rate will continue to rise in coming months… What you tend to see in Europe is that labour market adjustments take some time, especially compared to the US, where jobs are slashed much more quickly."

As it possible to notice from the simplicity of the article, BBC targets middle-class man with not direct interest in the matter that want to be well informed without entering too much in details.

In order to understand how is presented, in each country, this news; the third article analyzed was gathered from the Italian financial newspaper Il Sole 24 Ore. Also this article is based on comparison as an approach to the news but from the historic point of view comparing the 2008 and 2009 figures and explaining the consequences of the rise in the unemployment. It dramatizes the news in order to attract and frighten more readers exaggerating with figures without giving them a clear explanation. Unfortunately also this article is expecting unemployment will peak at around 11% at the end of 2010, transmitting to the readers a really bad future scenario.

As I wrote in my last post the crisis has moved from the financial sector to the service and industrial sector generating more than five million unemployed in less of a year

Nowadays the world is happy because “our moneys” are again safe in bank without the risk of bankrupt anymore. Nobody have realized that now the “real economy” is suffering and struggling; this is a way more bigger problem because the industrial and service sector were the one of creating new job, product and add value to the economy.

At this point who is in charge of helping small and medium company to overcome this period? Hopefully not the banks.

Wall Street Journal:

http://online.wsj.com/article/SB125689689146418275.html

Il Sole 24 Ore:

http://www.ilsole24ore.com/art/SoleOnLine4/Economia%20e%20Lavoro/2009/10/disoccupazione-eurostat-record.shtml?uuid=08f916f0-c53d-11de-a806-5c548b4990d3&DocRulesView=Libero

BBC News:

http://news.bbc.co.uk/1/hi/business/8333841.stm