Sunday, July 22, 2012

Flogging Round the World

The economies of the globe are receiving a flogging, one by one. Under Obama, the largest economy, the USA's, cannot even rescue itself, much less help the large numbers of other nations beginning to drown under debt, demographic decline, and green faux environmentally motivated energy suicide.
The United States, by far the world's biggest economy, has long pulled the global economy out of slumps. Now it needs help. Three years after the Great Recession officially ended, the American economy can't maintain momentum. For the third straight year, growth has stalled at mid-year after getting off to a promising start. _Bloomberg

Europe's populations are beginning to show the signs of low birthrates among core populations. The problem of insufficient young people to support the growing numbers of old people is adding to the continent's problems.
Europe's obstacles are even more severe. It's faced with crushing government debts, struggling banks and scant economic growth. Unemployment in the 17 countries that use the euro is 11 percent, the highest since the euro was adopted in 1999.

Greece, Portugal, Italy and Spain are in recessions. Germany and France are faring better, but both are likely to grow more slowly this year than America. _Bloomberg

As for China, we have seen over the past weeks and months that China is not immune from the economic problems of Europe and the US.
Chinese growth has decelerated for eight straight quarters. That's the longest slowdown in records dating to 1992, according to Yu Bin, a government researcher.

China is also feeling Europe's economic squeeze. Chinese exports to Italy dropped 24 percent in June from a year earlier. Exports to France fell 5 percent, those to Germany nearly 4 percent. Europe buys about 17 percent of China's exports. The impact of weak European demand for Chinese-made furniture, shoes, toys and other goods has fallen hardest on export-oriented manufacturers along China's southeastern coast. Some companies have closed. Others are cutting staff. _Bloomberg

From China, the problems flow downhill to Brazil, and to India. Brazil's government and people have been betting that the good times would never end, and the time to pay the piper is approaching.
"The current pace of credit growth in Brazil remains unsustainable — and the longer it continues, the bigger the risk of a messy ending further down the line," Capital Economics warned.

Similarly, the outlook has dimmed for India, the world's fourth-biggest economy. Its growth slowed to a 5.3 percent annual rate in the first three months of 2012, the slowest rate in nine years. _Bloomberg

Russia has its share of problems from rampant corruption and capital flight to widespread drug and alcohol abuse, and suicide. Still, some Russians see the country's source of economic support -- its energy wealth -- as the equivalent of Russia having won the lottery:
Lottery winners find it psychologically hard to accept that their winning is a completely random event. They tend to see it as their "achievement," the result of them being special or chosen by providence. Remarkably, this is also the case with Russia, where the government ascribes the country's relative economic prosperity not to the inflow of petrodollars — and the luck from an extended period of high global oil prices — but to its supposedly wise, prudent economic policies. Ordinary Russians similarly see the wealth that is flowing into their country as somehow the result of their hard work, not circumstances beyond their control.

Winners' greatest victims, however, are their own children. Very rarely are the lottery winnings used to ensure good education for winners' kids. Many end up spoiled, morally corrupt and traumatized by their parents' good fortune. This could be seen as a metaphor for Russia's lack of investment in its future. Russia has done little to wean its economy from oil or revive the education and research infrastructure that existed in the Soviet Union. Most alarmingly, lottery money usually ends up as an easy-come-easy-go fortune. Even enormous jackpots have been squandered completely. It is a cautionary tale for Russia, which could end up back in the indigent 1990s if oil prices fall. _MoscowTimes
The Earth's national economies are being generally flogged round the world, and even the winners too often end up losers.

No comments: