Consumer Confidence Faltering Across US and Europe During Holiday Push

Consumer confidence is markedly down across Europe and the United States in the opening weeks of the 2007 Holiday season and it doesn't look to improve in the next few weeks. The International Herald Tribune reported today that: "fewer Americans say they are planning major purchases than at any time in recent years, and that the proportion expecting the economy to create more jobs is at its lowest level since 1974." Additionally, two weeks ago the US Fed announced that they expected the US economy to continue to sputter in 2008.

Europeans are also being tighter this Holiday season, with the most optimistic predictions only projecting a 2% growth over the same period last year. The concerns in Europe are centered around growing inflation; the ECB announced on November 30 that the Euro-zone was averaging 3% yearly inflation, a full percentage point about the ECB's mark of 2%. While the inflation may not be too high, there are concerns with the US Fed expected to cut rates later this week that credit would become increasingly difficult to obtain - though the ECB did extend its lending period to help dampen such fears.

Europeans are generally more adverse to rising inflation rates than Americans, much of this phenomenon due to historical experiences with hyper-inflation. This is especially true in Germany, where Hans Wolfgang Brachinger, a statistics professor at the University of Freiburg in Germany, has recalculated the German inflation rate, which in November was at an 11-year high of 3.3%, to reflect what the German consumer perceives the inflation rate to be and found that "Germans sensed an annual inflation rate of 7.5 percent in October - more than twice the actual level."

Putin, Russia Freeze NATO Arms Pact Day Before National Election

Russian President Valdimir Putin signed a law suspending Russia's involvement in the NATO Arms Pact, threatening to quit the accord entirely on December 12. Russia contends that the 2004 NATO expansion into Romania, Bulgaria and the Baltic States provided the military alliance with far too much influence along its borders and has thus gone back against the Conventional Forces in Europe (CFE) treaty.

The CFE, signed at the tail end of the Cold War in 1989, details the amount of troops and certain types of armaments that are allowed in proximity to the Russian border. Originally, the CPE was signed between NATO and the Warsaw Pact countries, but as the governments of Eastern Europe have moved increasing towards the west, the treaty's borders have moved closer and closer to Russia. It is now at the point where the Russians are unable to currently move soldiers and equipment within certain areas of their own border without violating the treaty. Putin and the Russians also claim that becasue of increasing NATO troop presence in the expanded alliance that the NATO countries are actually in violation of the treaty's rules.

Putin's move to suspend Russia's involvement in the CPE comes as no surprise just prior to a domestic election that will likely place even more control into the hands of Putin's United Russia party. The move is likely to be popular with the Russian people: "Polls show that talking tough about Russia standing up to foreigners strikes a chord with millions of Russians who yearn for the return of the Soviet Union's once-mighty superpower status." This is a trend that opposition leaders, including the recently released Gary Kasparov, view as very troubling.

Chavez Threatens to Ax American Oil Shipments if US Interferes in Referendum

Venezuelan President Hugo Chavez has threatened to cut off oil shipments to the United States if the American government interferes in the upcoming referendum in Venezuela. Chavez, unlike in previous elections, has not invited election monitors from the EU or OAS - a move that may lead to claims of voter fraud in what is becoming an ever more contentious referendum in the South American country.

Considering the fact that Venezuela is the US' 4th largest oil supplier, a Chavez implemented ban on oil shipments to the US, combined with already historically high American oil prices could lead to a very uncomfortable situation for President Bush and American consumers. Additionally, it is doubtful that Venezuela would be hard pressed to find buyers for the newly freed-up portion of its oil supply, especially as China continues its high growth.

Chavez is calling on his constituents to repeal the section of the Venezuelan constitution that restricts the president to two terms in a bid to remain in power at the conclusion of his current term, among other major changes. Unlike his re-election campaign last year, there has been widespread protest in Caracas against Chavez's proposed policies - even amongst Chavez's most staunch supporters, the poor.