WORLD REVIEW

US

The US officials' full focus has shifted towards economic growth. In September, Obama proposed a $447 billion jobs plan to rescue the economy, by rebuilding infrastructure and taxing the rich. US growth is still very modest and needs to improve if the debt problems and unemployment issues are to be solved. Obama's re-election hopes are focused on this matter. Bernanke also said that no more QE is planned for this year.

Middle East

Libya has again been the focus of attention, as the rebels continue to hunt for Gaddaffi after taking over the capital of Tripoli. It would appear that things are slowly returning to normal with the recommencement of oil production on Sept 10th. The G8 have also made a commitment of over $40 billion in aid to the ME. Egypt, Tunisia, Morocco and Jordan are due to benefit.

Europe

Dominated by the debt crisis and the constant worry that Greece is on the verge of a default, this has subsequently hammered the French Banks who are heavily exposed to the debt of Greece and exacerbated the decline in euro share prices.

Italy, Greece and Portugal have all recently confirmed that they plan to increase austerity measures to solve the debt crisis. Spain has recently announced plans to introduce the public debt ceiling into its constitution. However, the markets remain deeply suspicious of a default. China is said to be seeking investments in Italy.

UK

Following the Vickers review on UK banks, it is likely that the UK Government will implement the biggest shake up of UK banks for 50 years, with capital adequacy requirements to be introduced way beyond international requirements and the investment/retail parts of the banks expected to be split.

The appalling riots in the UK have focussed the government's thoughts on jobs for the youth.

The Bank of England kept its interest rates on hold yet again and did not extend its £200 billion QE.

Australia/New Zealand

Dominating the news this month in the region is the Rugby World Cup finals being held in New Zealand in September and October. This is expected to give an estimated welcomed boost to the NZ economy of about $1.2 billion.

High interest rates and a relatively high currency are leading to a growing number of insolvencies in Australia, with manufacturing business failures reported to be up by 60% since 2008.

Asia

China's exports hit a record high in August, thus indicating that there is strong demand. We must wait and see if this is a sign of better times or just a blip.

Thailand's new government has advised that it intends to introduce a new higher Statutory Minimum Wage of 300 baht per day. Thailand is a major manufacturing producer and has a very low unemployment rate of 1.2%; however, it still needs to reduce the divide between the rich and the poor.

China's inflation eased from a three-year high in August, thus suggesting that policy makers might pause monetary tightening as the economy cools.