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Posts Tagged ‘global economy’

Corporate Debt In China Soars To Record Levels

March 5th, 2014 Comments off

According to a survey recently conducted by Reuters of 945 Chinese companies outside of the banking  and financial services sector, corporate debt in China increased by 260 percent over a 5-year period. This rate of increase within the corporate sector that is occurring in China is unprecedented; no other nation’s example demonstrates such a cascade of corporate debt among any other major economy over a similar period of time.

At present, corporate debt in China outside financial services has reached the staggering level of 12 trillion dollars. This is equal to 120 percent of China’s GDP, and about 15 percent of global GDP. This is a startling figure of corporate leverage in China, and comes on top of the rapid rise  in local government debt in China, which I discussed in a previous blog post. There are implications of a worldwide character for this massive accumulation of private and public debt in China, which cannot have its impact in the entire global economy.

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

Hillary Clinton Nude

Chilling video about Hillary Clinton and the 2016 presidential election from the author of the provocative book, “Hillary Clinton Nude: Naked Ambition, Hillary Clinton And America’s Demise.”

HILLARY CLINTON NUDE

Hillary Clinton Nude

 

 

 

 

 

 

 

China’s Hard Economic Landing Appears Imminent

August 1st, 2012 Comments off

As a percentage of GDP, China’s economic stimulus program of 2009 was the largest in the world, and second place to the U.S. in monetary terms. Ironically, the supposedly communist economy of the People’s Republic of China became the last best hope of world capitalism, in the wake of the global financial and economic crisis that began in 2008. Now, it appears, things may be unwinding in a bad way for Beijing.

Copying its capitalist rivals, Beijing’s hybrid government/private economy poured massive amounts of cash into creating new asset bubbles, particularly in real estate. China built shopping malls with no customers, cities with no inhabitants and roads with no traffic. Extravagantly redundant infrastructure was constructed with stimulus money, goosing China’s GDP with annual double digit growth rates. This model was clearly unsustainable; China’s leaders were hoping to buy time so that the nation’s major export markets in Europe and the U.S. would recover with their own stimulus programs, and resume  their buying spree of cheap Chinese goods.

“Kick the can down the road” became the official credo of economic policymakers responding to the global economic crisis. As with other economies pursuing this shortsighted policy prescription, China failed to address the fundamentals of its economic challenge. The proportion of domestic consumption as a share of  GDP in China is less than half the ratio of its customers in the developed world. With its economic ascendancy dependant on overseas customers, the stagnation and contraction of the economies of those customers leaves a void that Beijing cannot cover by building the economic version of sand castles.

With the Eurozone tottering on the edge of the abyss, the U.K. mired in recession and the U.S. growth rate so anemic, even with trillion dollar plus annual deficits, that it is now at stall speed, it appears that the policymakers in Beijing may have lost their stimulus spending bet.  Domestically, the Chinese PMI  (Purchasing Managers Index)  has slumped to the lowest level in eight months. Other indicators, even amid the opaqueness of China’s official economic data, point increasingly towards a hard economic landing  for the world’s second largest economy. The consequences will be dire, not only for  China, but also for the global economy as a whole.

 

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WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view and listen to the YouTube video audio excerpt  “Wall Street Kills,” click image below:

 

 

Sex, murder, financial power and pathological greed come together in the explosive suspense thriller by Sheldon Filger, WALL STREET KILLS: A NOVEL ABOUT FINANCIAL POWER, VIOLENT SEX AND THE ULTIMATE SNUFF MOVIE.
This video provides a free audio reading from chapter one of “Wall Street Kills.” The scene depicted involves two characters from “Wall Street Kills” having a business conversation in a Los Angeles suburb. One character is Peter Hoffman, director of new business development for a secretive Wall Street hedge fund and private equity group. The other character is Daniel Iachino, president of a major independent film company specializing in “adult entertainment” for niche markets. Hoffman is on a mission to investigate if portraying unsimulated violent death in the form of entertainment would be a lucrative business investment. The conversation between the two men quickly focuses on the phenomenon of snuff movies.

 

 

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Nouriel Roubini Issues New Warning On Global Economy

June 23rd, 2011 Comments off

In a piece for Al Jazeera entitled “black swan events and the global economy,” NYU economics professor Nouriel Roubini, the “doctor of doom,” has presented a new dark perspective on the current state of global economics. Roubini integrates a number of negative economic metrics and phenomena, including “black swan” events such as the Japanese earthquake and more mundane though far from rosy economic data that challenges the views of economists who are eternally optimistic. While the optimists believe the current negative economic factors are merely hiccups, and equity growth can resume in full force, Roubini warns that the dangers confronting the global economy are chronic, and may lead to a double-dip recession.

On the current Greek debt crisis, Roubini writes, “Global risk-aversion has also increased, as the option of further ‘extend and pretend’ or ‘delay and pray’ on Greece is becoming less desirable, and the specter of a disorderly workout is becoming more likely.”

One of the points Nouriel Roubini makes in his article is that  new financial and economic disasters on the scale of 2008 and would leave policymakers empty-handed, as the massive growth in public debt since 2008 leaves them without ammunition in the event of a new series of catastrophes. As Roubini puts it:

“This lack of policy bullets is reflected in most advanced economies’ embrace of some form of austerity, in order to avoid a fiscal train wreck down the line. Public debt is already high, and many sovereigns are near distress, so governments’ ability to backstop their banks via more bailouts, guarantees, and ring-fencing of questionable assets is severely constrained. Another round of so-called ‘quantitative easing’ by monetary authorities may not occur as inflation is rising – albeit slowly – in most advanced economies.”

In essence, Roubini offers a portrayal of the current state of the global economy that is laden with doom and gloom.

 

IMF Warns That Global Economy Faces Collapse in Growth

September 11th, 2010 Comments off

An additional signpost on the road to a double dip recession for advanced economies came from the latest briefing note issued by the International Monetary Fund. According to the IMF, global economic growth is likely to shrink in the last quarter of 2010. In essence, this means that the supposed recovery, artificially stimulated by unprecedented levels of public debt, has in effect failed.

The contents of the IMF briefing note contains other indicators of growing concern about the future trajectory of the global economic crisis. There is a stern warning about unsustainable public deficits  in advanced economies that need to be reined in; imbalance in the level of exports versus imports in these same economies; growing risks of proliferation of sovereign debt crises similar to what Greece is currently experiencing.

Perhaps the most sober element in the IMF report is a warning about the ramifications of the worsening home repossession crisis in the United States. Since the U.S. housing market was ground zero for the 2008 global financial crisis, this would seem to indicate that the other shoe is still to drop on American real estate weaknesses and the further damage it may inflict on the global economy.

Nouriel Roubini Sees Growing Risk of Double Dip Recession in the U.S.

September 6th, 2010 Comments off

NYU Economics Professor Nouriel Roubini believes that the risk of a double dip recession is growing in the United States. He assesses the  probability of a double dip at 40%, the other scenario being subpar economic growth (under one percent), which feels like a recession in terms of high unemployment, growing public deficits, declining home values and increased losses among banks and financial institutions.

“You don’t need negative economic growth to feel like a recession  when growth is well below trend growth,” Roubini said in a recent Financial Times interview. Even if a double dip is technically avoided in the last quarter of 2010, Nouriel Roubini’s forecast for 2011 is dire. He sees the risk of a double dip recession increasing, along with widening credit spreads and interbank lending rates. Compounding his gloomy projection, Roubini sees little left for policymakers to grapple with, either on the monetary or fiscal side. In particular, he sees another flurry of quantitative easing by the U.S. Federal Reserve as being “impotent.”

The downbeat perspective of Roubini on the U.S. economy extends to Europe, where he believes the recent impressive growth figures in Germany are merely temporary. Furthermore, he points out, Germany is the best performing economy in the Eurozone, where the remaining countries are facing disaster. Half of the Eurozone is already experiencing a double dip recession. In addition, Japan is courting a double dip, and even strong emerging economies such as China are showing signs of an economic slowdown.

The economist known as “Dr. Doom” is actually trying to view economic trends in a realistic manner. If his interpretation of emerging trends strikes a chord of doom and gloom, one needs to look critically at those trends rather than marginalize the messenger. It should be recalled that when Nouriel Roubini issued his warning about the coming collapse of the financial order as we once knew it, based on a house of cards and subprime mortgages, he was harshly ridiculed by many mainstream economists. All the more reason to listen to what he has to say about the current state of the global economy.
 

 

Overall, I have not seen Professor Roubini so gloomy on the state of the global economy since his prescient warnings of  financial Armageddon approaching in the months leading up to the implosion of the investment banks in the summer and fall of 2008.

China Faces Growing Labor Unrest Amid Wave of Strikes

June 21st, 2010 Comments off

It is the epitome of all ironies. A supposedly workers Marxist/Communist political entity, the Peoples Republic of China, is in reality capitalism’s ultimate creation: an authoritarian  workshop for multinational corporations, that keeps wages at  the lowest possible levels, while making strikes and plant shutdowns by workers strictly illegal. This enforced low-wage corporate model is the basis behind China’s export boom and economic ascendancy. However, despite government pressure, cracks are beginning to appear in the façade.

Strikes are breaking out throughout China. The factory of the world is in revolt, with workers unrest growing like wildfire. Most recently, plants that produce parts for the Japanese automakers Honda and Toyota have been hit by labor shutdowns. In virtually every case that has become publicly exposed, the employers have been forced to provide large pay rises as the price of ending the strike. Illegal or not, the strike has emerged as a potent and popular labor weapon across the shop floors of the factory of the world.

There are profound economic and political ramifications related to China’s growing labor unrest. Inflation is increasing in China amid asset bubbles fed by Beijing’s loose fiscal and monetary policies. The Chinese workers are becoming increasingly militant in reacting to the widening gap between rich and poor in this supposedly classless communist nation. What is at risk is the very essence of what has thus far enabled China to compete on the world stage and emerge as the primary global exporter. Also at risk is the ability of the central government to profit from a low wage economy, in the process building up huge cash reserves. In large part, these reserves are what has enabled the Chinese sovereign fund to invest in U.S. Treasuries.

This is potentially a huge story, bigger than many currently appreciate, given that the Chinese authorities have probably suppressed the news concerning most strikes and workers demonstrations in China.  What we have learned about the strikes at Honda and Toyota plants in China is merely the tip of the iceberg of labor discontent in China, a factor that may in time create severe obstacles for the Chinese and global economy.

Sovereign Debt Crisis

May 9th, 2010 Comments off

The doomsday events now unfolding in the Eurozone are in line with the prediction in my book, GLOBAL ECONOMIC FORECAST 2010-2015: RECESSION INTO DEPRESSION (available from the homepage of this website, and on Amazon.com in hard copy or Kindle download).

My forecast is that a profound sovereign debt crisis will mark a far more dangerous phase in the global economic crisis, sparking a synchronized global depression. This weekend, the Eurozone political leaders and  the European Central Bank are conducting emergency consultations, boasting that they will unleash some sort of “surprise” by the time Monday financial markets are open.

When politicians such as Nicolas Sarkozy, president of France, boasts about taking on the speculators while the fiscal edifice of Europe crumbles beneath their feet, I am not exactly reassured that these politicos know what they are doing, or comprehend the turbulent economic and financial forces that have been unleashed by their reckless fiscal mismanagement.

Beware, this is not a European problem. It is merely another marker of a profound systemic crisis afflicting the entire global economy. The sovereign debt crisis may be emerging with radical force in the Eurozone first, however the UK, Japan and the United States are the next dominos that will ultimately fall as destructive financial and economic forces beyond today’s clique of mediocre politicians capacity to control let alone comprehend gain velocity.

Scary Data From China And The UK As Global Economic Crisis Worsens

January 24th, 2009 Comments off

While politicians have ceased denying what cannot be denied, that the world is enduring a crippling global financial and economic crisis, they still largely inhabit the land of make believe. What is more, they beckon their fellow citizens to enter blindly into their Alice in Wonderland construct for global economic salvation. Never mind that loose monetary policies enacted by central banks and massive deficit spending sustained by political actors lubricated the skids of this global economic disaster, we must accept on faith the prescription of the political establishment; even more public debt, compounded by near-zero interest central bank rates.

The latest macroeconomic data that has emerged from China and the UK should pour a bucket of cold water over even those most tolerant of political smoke-and-mirrors disguising itself as economic salvation. To say that the numbers were dismal would be an extreme understatement. Perhaps more poignantly, they are further markers on the highway to acute global economic meltdown.

China has for a decade been the primary engine of global economic growth. By becoming the factory for much of the consuming world, it accumulated huge savings, this cash pool being used to loan money to the United States, its major customer by a wide margin. As long as Americans bought Chinese products and kept the factory floors from Shanghai to Canton buzzing with full employment, the bosses in Beijing were quite content buying U.S. Treasury bills by the hundreds of billions of dollars. Now that consumer demand in the U.S. is contracting, however, along with other major markets, China will likely need to shift its accumulated savings towards financing its own deficit spending, as opposed to Washington’s stimulus credit needs. The official results for the 4th quarter GDP show a drastic reduction in growth, pointing to a sharp downturn in the Chinese economy.

A 4th quarter result of 6.8 % growth would seem like manna from heaven in comparison with other major economies. However, in the context of China’s massive labor pool this number is problematic, as double-digit growth has been essential for maintaining a level of employment satisfactory for sustaining social cohesion. Economist Nouriel Roubini points out, however, that this number is misleading. He believes that the Q4 in China brought no growth, perhaps even the beginnings of negative growth. Signs point to a recession in China during 2009, with disastrous consequences for the global economy.

The boom in the past decade in the Chinese economy also fueled economic expansion in much of Southeast Asia. Enterprises in South Korea, Taiwan, Thailand and Singapore, as well as other Southeast Asian nations, provided raw materials, products and services that were incorporated into the output of China’s vast economy. Contraction in China will be devastating to the economies on her periphery, while also diminishing her appetite to lend increasingly scarce savings to finance the profligacy of the U.S. federal budget.

In the UK, the 4th quarter GDP numbers, revealing a decline of 1.5%, magnified the apocalyptic news that has emerged from the carcass of its banking sector. As this is the second consecutive quarter of negative GDP growth in the UK, that country is now technically in a recession, hardly a startling revelation for the beleaguered British taxpayers. As with America, the political establishment offers only more tax-funded bailouts, even more massive deficit spending, garnished with historically low Bank of England fund rates.

In addition to the appalling quantitative data emerging from China and the UK, there is one other barometer of the cascading Global Economic Crisis, the obscure Baltic Dry Exchange Rate. In simple terms this is a measure of the cost of shipping raw materials to China by freighter. When the Chinese economy was humming, the demand for shipping dictated a high rate. That is now history; as the Baltic rate is sinking like a broken old rusty ship, reflecting collapsing demand by China for raw materials, as its factories shutter their doors. In essence, the current anemic Baltic rate attests to a process of virtual de-industrialization occurring on the planet on a titanic scale.

Though China and the UK have different economic characteristics and dynamics, they are both significant actors, along with the United States, in the global drama that is now unfolding. The examples I have sited are just another dose of empirical data pointing to the year 2009 as being one of economic extremis.