Economics is extremely useful as a form of employment for
economists.
J. K. Galbraith.
When China sneezes, commodity firms, US frackers and emerging market economies, get pneumonia. China desperately needs Americans and European to get back on the “going into debt to buy Chinese goods” cycle. Forget about the Europeans, where Volkswagen single handedly has probably pushed the Eurozone into recession. Who in Euroland is going to buy a diesel engine passenger car that’s potentially harming the driver, his family, his dog, his neighbours, and the ecology. Soon VW will be shutting down production lines. And don’t forget Europe just shot itself in both feet, when Mrs. Merkel unilaterally changed Euroland’s “migrant” policy to “let them all in.” Noble perhaps, Christian even, but incredibly foolish and insane.
As
for America, from the wrong, socialist side of the Atlantic, it looks to me
that US consumers are wary about putting on much more debt to buy Chinese goods
they don’t really need. While it’s still
too early to say, I think that the US economy is flirting with a new recession.
China is just going to have to keep on sneezing for the foreseeable
future. For the foreseeable future
commodities firms, US frackers, and the emerging markets are just going to go
through much more pain.
Global economy loses steam as Chinese, European factories falter
World
economic growth lost momentum in September, with China's factory output
shrinking again, euro zone manufacturing growth slowing, and U.S. activity
steady.
The
latest business surveys across Asia, Europe and the Americas paint a gloomier
picture and are likely to prompt more calls for central banks to loosen
monetary policy even further.
"The
data probably increases the case for more stimulus in certain parts of the
world, especially from the People's Bank of China and the European Central
Bank," said Philip Shaw, economist at Investec in London.
---- Surveys of China's factory and services sectors showed the world's second largest economy may be cooling more rapidly than earlier thought, with deeper job cuts.
Taken
together with a stock market crash in Shanghai during the summer and a surprise
devaluation of the Chinese yuan, the data highlight just how difficult it will
be for policymakers to steer China's economy out of the biggest slowdown in
decades.
"Two
straight months of manufacturing sector contraction with a depressed equity
market suggests China's third-quarter GDP growth is likely to have slowed to
6.4 percent," economists at ANZ said.
The
official manufacturing Purchasing Managers' Index (PMI)in China inched up to
49.8 in September from
49.7, but was still below the 50 level on the index
separating growth from contraction.
More
The Pain Trade: How Slumping Commerce Threatens Global Growth
October
2, 2015 — 12:01 AM BST Updated on October 2, 2015 — 8:20 AM BST
The
world’s biggest economies are finding it increasingly hard to trade their way
out of trouble.
Once the grease
of global growth, international commerce failed to rebound completely from the
2009 recession and now is slowing anew. Chinese exports tumbled 5.5 percent in
August from a year earlier, while those of the U.S. fell 3.5 percent. South
Korea and Singapore witnessed double digit declines.
Reflecting
such weakness, the World Trade Organization this week cut its forecast for
trade this year to 2.8 percent from 3.3 percent. It acknowledged its new
prediction may be “over optimistic.”
Such
rates fall short of the 5 percent average of the past two decades. Also gone
are the 1990s and early 2000s when trade grew twice as fast as economic growth
-- 2015 is set to be the fourth consecutive year in which the two expand around
the same speed.
More
worryingly, Carl Weinberg, chief economist at High Frequency Economics in
Valhalla, New York, points out that total world exports as of June were running
below their year-ago levels at an annualized rate of $1.6 trillion, the
equivalent to 2.1 percent of global gross domestic product.
That
extended the decline in exports during the first six months of the year to 11
percent from the previous year, enough to fret about stagnation in the global
economy given Weinberg’s estimate that there is a 70 percent correlation
between expansion and export shifts.
“The
contraction of world trade has yet to show a bottom,” said Weinberg. “This
could be more than an economic headwind, it could be a tornado.”
More
Fears of a Chinese 'hard landing' trigger mass exodus from emerging markets
Investors are pulling their money out of emerging markets in the biggest net outflow of capital since 1988
Investors are on track to pull $541bn (£357bn) out of emerging markets this year, as fears that China is headed for a ‘hard landing’ have prompted the greatest flight for safety since 1988.The Institute of International Finance (IIF) said that the net outflows would most likely continue next year, as the prospect of US interest rate rises threatens to dampen the emerging market outlook further.
Charles Collyns, managing director and chief economist at the IIF, said that “emerging markets have seen sharp losses in recent months”. The IIF’s forecasts came as economists warned that emerging markets could face a brutal slowdown over the next 12 months.
The carnage in investments marks a huge reversal from 2014, when investors poured a net $32bn into emerging markets.
More
Below,
the commodity scorecard almost year to date. About as dismal as dismal can be.
An economist’s guess is liable to be just as good as anybody
else’s.
Will Rogers.
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