Porsche Profit Grows from Sales in China, British Conservative Government Cheers Signs of Economic Slowdown, Italy Boos Its Prime Minister

And Business and Economic News Outside of the U. S.

While the United States was consumed with its totally “devoid of all value” battle on raising the debt ceiling, an action that had absolutely nothing to do with economic recovery and everything to do with politics, the rest of the world marched on.

In Germany, Porsche reported a huge surge in profits. 

The carmaker said first-half operating profits jumped from €675m to €1.1bn, while turnover rose by 19 per cent to €5.2bn ($7.3bn). The results imply an operating profit margin of more than 20 per cent – among the best in the industry

And the reason for this performance,

Like other German premium carmakers, Porsche is enjoying bumper profits thanks to a boom in emerging markets, particularly China. 

The Dismal Political Economist is so old that he can remember when Cadillac was the Cadillac of luxury autos. 

In Britain, interest rates on government bonds were at near record lows.  For some reason the Conservative government in Britain seemed to take this as a sign their economic policy was working.

The Treasury insists investors have poured money into UK gilts because of the government’s planned spending cuts and tax rises, designed to bring the £150bn deficit under control.

Apparently the British government feels that their economic goal is low interest rates, instead of increased employment and higher growth.  And they nicely fail to understand Econ 101, that the low rates are the result of expectation of poor economic performance.

The Bank of England could even go further and resort to more quantitative easing, according to Samuel Tombs at Capital Economics.

“There are good reasons to think that gilt yields will remain low and may not yet have found a floor,” he said. “Signs that the UK’s economic recovery has ground to a standstill have led markets to revise down their interest rate expectations sharply.”

Britain’s version of the Secretary of the Treasury is George Osborne. His spokesman had to comment because Mr. Osborne is on a (sarcasm alert!) nice, well deserved holiday in Los Angeles.

Mr Osborne’s spokesman admitted there had been a recent “global revision downwards of expectations” about future economic growth but argued that the UK was not unique in this regard.

 So the message to our friends in England is this, yes your expectations of recovery are being downgraded, but it’s ok because everyone else’s is too.

There, don’t you feel better now England.  Jolly good show!

And if low interest rates are a positive indicator on the economy the U.S. must be booming.

Italy and Spain are suffering from the market’s lack of confidence in their respective governments ability to generate economic growth and get debt and deficits under control.  In Italy much of the problem is with Silvio Berlusconi, it long serving Prime Minister.

A born salesman whose peppy speeches once entranced Italians, Mr. Berlusconi in recent months has often seemed more consumed with his own personal legal woes and the fate of his businesses — which include Italy’s largest private broadcaster — than with the fate of his country.

Mr. Berlusconi still enjoys command of the government, but the financial markets are turning against him.  Interest rates on Italian government debt is reaching very high levels as investors wonder about the ability of the country to even stay together.  Failure of the Italian economy and a requirement for it to join Ireland, Greece and Portugal as needing a bailout will almost certainly doom the Euro. 

Other than that it is not  all that important.

Remember when it was the goal of the U. S. to beat Russia.  Well we may well be on our way towards inflicting a severe blow on the population.  U. S. fast food companies are expanding in a big way in that country. 

 For a long while only McDonalds was present in Russia.  But now

Burger King has opened 22 restaurants, mostly in mall food courts, in two years. Carl’s Jr. has 17 restaurants in St. Petersburg and Novosibirsk. Wendy’s has opened two restaurants including a flagship on Arbat Street in Moscow, and plans 180 throughout Russia by 2020.

The Subway sandwich chain has opened about 200 shops in Russia, working through several franchisees. Yum Brands, which owns KFC, Pizza Hut and Taco Bell, operates a co-branded chicken restaurant chain in Russia, called Rostik’s-KFC, and Il Patio in the Italian food segment. Yum now has about 350 restaurants in Russia.

So welcome to our world Russia.  And don’t worry about any health issues.  Humana, the Mayo Clinic, Johns Hopkins, Massachusetts General and a whole bunch of other U. S. health care companies are just waiting to descend into your country.  You do have Blue Cross and Blue Shield, don’t you?