Will Jeremy Corbyn Transform The UK Into A Marxist Economy And A Police State?

September 2nd, 2019 Comments off

When radical left-winger Jeremy Corbyn shocked the UK political establishment by taking over the country’s Labour Party, few thought he would last long as leader of the official opposition in Parliament. Yet, in the snap election called by then-PM Theresa May, he surprised everyone with a strong showing, denying May a majority government. Now, with Brexit creating massive political chaos in the United Kingdom, only the foolhardy would claim that Corbyn has no chance of becoming the nation’s next prime minister.

Corbyn is believed by many to be both a radical, Trotskyite-style Marxist, and an anti-Semite, who has associated with holocaust deniers and visited the graves of Palestinian militants who murdered Israeli athletes at the 1972 Munich Olympics.

But what about Corbyn’s plans for remaking the UK economy? The leading financial publication in the United Kingdom, the Financial Times, has just published an in-depth analysis on what Jeremy Corbyn plans to do to the economy of the United Kingdom, should he become prime minister. The article                                                                                                                                  ( https://www.ft.com/content/e1028dda-ca49-11e9-a1f4-3669401ba76f   ) points out that the Marxist dogma underlying the plans of Corbyn and his Trotskyite advisors would involve massive wealth confiscation and redistribution of the national economy, in essence a program not too dissimilar to what occurred in Venezuela under the late Hugo Chavez ( whose policies Corbyn has publicly praised).

More than 25 years after the fall of the Soviet Union, is European Marxism about to have a rebirth under a future Prime Minister Corbyn? And would Corbyn-style Marxism bring about the same level of tyranny, police state oppression and economic destitution that occurred in the old Soviet-bloc, and is currently afflicting Venezuela?

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Bond Yield Curve Points To Major Economic Recession

August 14th, 2019 Comments off

 

Until now, the last time the U.S. Treasury 10-year bond yield dipped below 2-year bonds was in 2007. That event foretold the 2007-08 global economic and financial crisis. This inverted curve has been uncanny in its predictive ability to foretell a near-time arrival of a major recession. Now, in August 2019, we again have an inverted yield curve.

Investors worldwide know the significance of this development. Stock markets, including the Dow Jones, are plummeting by big figures. Is this an overreaction, or a rational response to impending fiscal and economic danger.

The inverted yield curve should not be viewed in isolation. Rather, it should be seen in the context of the escalating trade war between the world’s two largest economies, the growing risk of a hard Brexit, and economic stagnation in Europe.

The warning chimes are growing louder.

Goldman Sachs Cuts U.S. GDP Growth Forecast As Trade Tension With China Fuels Recession Fears

August 12th, 2019 Comments off

Jan Hatzius, chief economist at leading global investment banker Goldman Sachs, has issued an updated  projection for U.S. Q4 GDP growth; a lackluster 1.8 percent. This reflects a reduction of 20 basis  points from the previous forecast, with Hatzius conceding that the U.S. trade dispute with China has had a negative impact far beyond what was originally assessed by Goldman Sachs.

The latest projection  from Goldman Sachs on trends in the American economy are  indicative of a growing belief that the ongoing and escalating trade war between China and the United Sates has greatly increased fears  that it will trigger a global recession.

It appears that the leadership circles in Beijing are willing to face a major recession that severely afflicts the Chinese economy as a price worth paying to bring down President Trump in the upcoming 2020 U.S. presidential election.  What President Xi  Jinping of China may be ignoring is that a global recession may have unpredictable and disastrous  repercussions for the Chinese economy and the country’s social stability, and jeopardize the future of Beijing’s “One Belt-One Road” initiative.

 

Nouriel Roubini Sees Sino-American Tension Driving Risk of Global Recession in 2020

June 22nd, 2019 Comments off

 

He was dubbed “Dr. Doom”  for his uncanny and highly accurate prediction of the 2008 global financial crisis and global recession. Now, Roubini is again making dire predictions of a catastrophic global economic recession. This time, however, the decisive driver of the meltdown won’t be subprime mortgages but rather the increasingly tense relationship between the two largest economies in the world – America and China.

In an article for Project Syndicate entitled, ” The Coming Sino-American Bust Up,” the noted economist  writes,  “Whether or not US President Donald Trump and his Chinese counterpart, Xi Jinping, agree to another truce at the upcoming G20 summit in Osaka, the Sino-American conflict has already entered a dangerous new phase. Though a negotiated settlement or a managed continuation of the status quo are possible, a sharp escalation is now the most likely scenario.

Roubini sees a global recession occurring as soon as 2020, a predictions that other economists have also prognosticated on. With the previous global economic crisis of 2008 having consumed all the policy perceptions that central  banks and sovereign fiscal stimulus had available for decision makers, the coming global economic recession will find policy makers with  few silver billets remaining. In the meantime, nationalism may replace rational economics in determining the course of the next recession, which Nouriel Roubini believes will be largely determined by the increasingly strife-ridden relationship between the United States and China.

Sheldon Filger-blogger for GlobalEconomicCrisis.com

Zombie Apartments: Manifestation of China Economy in Deep Trouble

May 7th, 2019 Comments off

The trade war between Washington and Beijing tends to obscure the darkest manifestation of a looming economic danger for China. Though in past years much commentary has been offered on China’s “ghost cities,” the implications been largely glossed over. But they shouldn’t be.

In China’s major urban centers there are currently 65 million unoccupied apartments. This reflects more than 20 percent of all homes in China.  Taking into account that housing construction and its related industrial activity are responsible for one third of all recent GDP growth in China, building zombie residential apartments are not only a non-viable long-term economic  policy; this unsustainable development model will eventually have to come to an end.

When that occurs, the ramifications for President Xi Jinping and the leadership in Beijing will be inevitably dire.

IMF Cuts Global Growth Projection Amid Growing Fears of Worldwide Recession

January 23rd, 2019 Comments off

Sheldon Filger-blogger for GlobalEconomicCrisis.com

Christine Lagarde, chair of the International Monetary Fund- – IMF- – added to the anxieties of the rich and powerful gathered for the annual pilgrimage to Davos , Switzerland for the World Economic Forum. Cutting the IMF forecast for 2019 from 3.7 % to 3.5 %, she was acknowledging what is already widely known; there are a growing number of indicators that the global economy is headed for a hard landing.

There is growing instability in major economies, for example the Brexit snafu afflicting the UK and the European Union. There is political gridlock in the USA. And then there is China, the economic gorilla in the room,

The trade wars initiated by the Trump  administration  have harmed both American and Chinese economies. But China is facing other forces; a growing level of indebtedness afflicting both public and private companies. The recent data reflecting the sharp drop in official Chinese GDP growth statistics reflect a major slowing down of the Chinese economy.

Unlike the economic crisis of 2008. when the United Sates was the primary trigger, the next major global recession will most likely be unleashed by events in China, now the world’s second largest economy. 

 

China Has Fifty Million Empty Apartments

November 9th, 2018 Comments off

While economists have been focusing on signs that GDP growth in the Chinese economy is slowing, and the escalating  trade war with President Trump’s America, Bloomberg has reported on another potential  pitfall in the world’s second largest economy.

According to Bloomberg, China has fifty million unoccupied apartments. This represent 22 percent  – more than a fifth – of the nation’s housing stock. This clearly reflects the speculative character of much of China’s housing  construction, and in both raw numbers  and percentage terms is the highest vacancy rate in the world.

As noted in Bloomberg, should  any  negative economic development precipitate a massive sell-off of these fifty million unoccupied apartments homes,  the result would be a catastrophic deflationary spiral in the Chinese real estate market. As with the U.S. subprime crisis of 2007, such a scenario would have global economic consequences of the most dire character.

 

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Nouriel Roubini – “Dr. Doom” – Predicts Major Financial Crisis In 2020

September 17th, 2018 Comments off

Economist  Nouriel Roubini famously predicted the Global Financial Crisis of 2008. His forecast was so accurate, he was dubbed “Dr. Doom” by pundits, though Roubini rejects that term, preferring he be dubbed “Dr. Realist.” And it is that sense of realism, and his track record as a highly professional economist analysts, that  led him to predict, in an article published by Project Syndicate,  that a major financial crisis will arise in 202o, leading to a severe global recession.

The first cause of the 2020 crisis, according to Roubini, is “the fiscal-stimulus policies that are currently pushing the annual U.S. growth rate above its 2% potential are unsustainable. By 2020, the stimulus will run out, and a modest fiscal drag will pull growth from 3% to slightly below 2%.”

The poor timing of U.S. stimulus spending will contribute to inflation, compelling the Federal Reserve to continue increasing its interest rates. These inflationary trends will occur in other major economies, with other central banks accordingly replicating the actions of the U.S. Federal Reserve.

Additional factors adding to the toxic fiscal and economic mix are the policies of the Trump administration leading to a major global trades war,  interdiction of global supply chains and immigration policies that restrict growth and investment.  Parallel to this, fiscal and monetary policies in Europe will slow down European economies.

Roubini adds that leverage in emerging markets and several advanced economies is overly excessive, real estate too expensive, leading to a major correction if over-valued equities. In particular, fixed income assets will be highly vulnerable, and the correction, exacerbated by high frequency/algorithmic trading, will create flash crashes.   In this scenario, a backstop by central banks will not be accessible, as these institutions pursue normalized interest rates  and policies in an environment of rising inflation.

With a presidential election looming in 2020, Roubini believes the Trump administration may pursue  a “wag the dog” scenario, such as a military conflict with Iran, as a distraction in the face of a deteriorating economy,  triggering “a stagflationary geopolitical shock not unlike the oil-price spikes of 1973, 1979, and 1990. Needless to say, that would make the oncoming global recession even more severe.”

The global economic crisis  Nouriel Roubini believes will occur in 2020 will like be more severe than 2008. The noted economist write in his article, ” once the perfect storm outlined above occurs, the policy tools for addressing it will be sorely lacking. The space for fiscal stimulus is already limited by massive public debt. The possibility for more unconventional monetary policies will be limited by bloated balance sheets and the lack of headroom to cut policy rates. And financial-sector bailouts will be intolerable in countries with resurgent populist movements and near-insolvent governments…when it comes, the next crisis and recession could be even more severe and prolonged than the last.”

The dark economic forecast offered by Nouriel Roubini  may revive the earlier moniker of “Dr. Doom.” however, as with his prediction made prior to the 2008 Global Financial Crisis, it has the ring of analytical realism and unassailable logic. On that basis, 2008 may very well bring the onset of a global economic crisis so severe it may lead, unlike the crisis of 2008, into a prolonged economic depression that threatens geopolitical stability as well and economic and financial equilibrium.

 

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Turkish Lira Is Imploding – – Economy Of Erdogan About To Go Cold Turkey

August 13th, 2018 Comments off

When the aspiring Sultan of neo-Ottoman Turkey, Erdogan, called early presidential elections, nuanced observers pointed out he probably knew in advance that the Turkish economy was about to enter a severe recession, and he wanted to secure his near-dictatorial presidential  powers before the deluge set it. It is now setting in , with a vengeance. The country’s  fragile currency, the Lira, continues to erode at breakneck speed. On August 12, it plummeted to just above 7 to one U.S.  dollar.

Turkey’s high growth rates under Erdogan were illusory; they were fed by massive borrowing from foreign banks, the  loans denominated in dollars and euros. The collapse of the Turkish Lira leaves open the probability that foreign credit  will disappear, battering the Turkish economy with severity.

Turkey’s looming economic and financial collapse cannot be easily contained. Many banks, especially in Europe, hold Turkish debt in large quantities. An economic collapse in Turkey will have highly negative ramification in Europe, and   likely globally.

Trump Global Trade War Could Bring Economic Catastrophe

July 10th, 2018 Comments off

The  core supporters of President Donald Trump maintain that despite the at times troublesome tweets and verbal coarseness, this is trivial compared to the tangible economic results achieved during the first year-and-a-half of his administration. The relatively high GDP growth rates and low official unemployment rates are heralded by his adherents as signposts on the road of making America “great again.”

I am not as sanguine. In  the first place, based on the pattern of economic cycles in the last hundred years, the American economy is overdue for a severe  recession. It has not happened yet due to the monetary alchemy of the U.S. Federal Reserve, in lockstep with other central banks across the globe.

Secondly, and more importantly, Trump has now unleashed a trade war. It is the economic equivalent of an economic world war, as President Trump is targeting friend and foe alike;   China, Canada   and the European Union have been hit with sizeable tariffs; these countries have responded with retaliatory tariffs, matching America’s in scope and severity.

Many scholars of the Great Depression have argued that this worldwide economic calamity was not driven by the Wall Street crash of 1929, buy by a massive wave of protectionism in the early 1930s, characterized by a wave of tariffs and quotas.

Has President Donald Trump opened a Pandora’s box that may unleash a massive global economic crisis?