For this week's Sandwich Monday, we try an update to the breakfast classic "Fruity Pebbles." They've added a Pop-Rocks-like substance to make the cereal sizzle in your mouth.
Students at Rice University designed a low-cost medical device to help premature infants breathe. The instrument, which uses a cheap aquarium pump, boosted the survival rate of newborns with respiratory problems by 60 percent at a rural hospital in Malawi.
The U.S. stock market fell hard Monday—with the Dow Jones Industrial Average down more than 2 percent, a fall of 326 points to 15,372—on concerns about U.S. manufacturing, emerging market troubles, and China’s long-term economic slowdown.
With the Federal Reserve now gradually trimming back its fiscal stimulus, international markets have been feeling the pressure.
Paul Ashworth at Capital Economics in Toronto says: "We’ve had problems emerge in Turkey, in Argentina, and to a lesser extent that has spread to other countries such as Venezuela, South Africa, possibly even to Indonesia," says Ashworth.
While Ashworth’s list of troubled emerging markets seems long, he says each country is beset with specific problems, some of which can be traced to unsound fiscal policies.
What's scarier to Ashworth? China.
China's ongoing slowdown could have knock-on effects in a wide range of emerging economies, and fears of disruption are unsettling global equity markets. China’s manufacturing activity fell to a six-month low in January. Economists predict China is likely to grow at an annual rate of just 7 to 8 percent in coming years, as opposed to the double-digit growth the country has seen for the past three decades.
“There’s sort of a snowballing effect here that starts with China but ripples through to many of these emerging-market countries,” says Gary Thayer, chief macro strategist at Wells Fargo Advisors in St. Louis.
He points out that China is reorienting its economy intentionally--to focus more on consumption and internal growth, and less on exports and external investment. Thayer says this is impacting major emerging economies on other continents that supply raw materials for China to build houses, and high-speed train lines, and iPhones.
"A decade ago it might have been more isolated to Asia," says Thayer, "but now countries in South America, even South Africa” are feeling the slowdown in commodity demand from China. These include Chile for copper, Brazil and Australia for iron ore, and several African countries that export hard-to-find metals."
But Nicholas Lardy, senior fellow and China expert at the Peterson Institute for International Economics points out—China’s economic shift also has a positive side.
"Incomes are rising in China, diets are improving," says Lardy. "China will still have a large and growing demand for agricultural products—American soybeans for animal feed. Services are rising—medical services, education. Chinese are traveling more abroad, so Boeing and other aircraft suppliers are going to do extremely well."
And while a few U.S. heavy-equipment makers might see a slowdown in demand for tractors and other capital equipment, Lardy says new exports to serve China’s growing middle class—by U.S. farmers, and software companies and insurance companies—should more than make up for the loss.
John Canally, chief economist at LPL Financial in Boston, says that from his scrutiny of U.S. regional reports on economic activity from the Federal Reserve, he doesn’t see much evidence of a pullback in manufacturing or employment by U.S. companies due to China’s slowdown.\
"You might have some companies cite China as an excuse for missing earnings projections," says Canally."But thus far we haven’t seen that the slowdown in emerging markets, which has been going on for two or three years now, has had a big impact on corporate profits."
Canally does says global growth is shifting, as the recovery from the Great Recession proceeds. Emerging markets led the way back to growth in late 2008 and early 2009—while developed economies were still mired in recession and financial crisis. But some of those emerging economies began slowing down in 2011. Now, with investors pulling out and the Fed’s tapering exacerbating that trend, emerging economies are being overtaken by the biggest, most advanced economies.
"The growth pattern in the world is shifting away from emerging markets and toward developed markets," says Canally. "Growth is going to come from the U.S., which we expect to grow at about 3 percent this year. Japan’s economy is accelerating, and so is Europe’s."
The British government says yes and points to a lengthy report. But economists and other critics say the Games rarely if ever produce long-term economic benefits.