John Ward – Crash 2 : Bad News Spreads To Asia, South America… And Austrialia – 1 June 2012

If you have a globalised economy, sooner or later you’ll have a global depression

Take a look at these European bourse numbers for today..

Stoxx 50 -2.2%, Germany -3.5%, France -2.2%, Italy -1.1%

….and Spain -7.1% on the week.

In the US, the May non-farm employment gain was 69,000…miles below the 150,000 generally expected. The jobless rate was forecast to fall, but actually rose slightly to 8.2%.

China’s annual economic growth is expected by analysts to fall to 7.9% in the second quarter, the first dip below 8% since 2009. The country’s official purchasing managers’ index – covering China’s biggest, mainly state-backed firms – fell more than expected to 50.4.

Brazil’s go-go economy is slowing rapidly: it’s forecast for 3% going forward, but few Brazilian business figures believe that. Government officials blame Europe and the U.S. for reduced demand, but then they would say that…and anyway, I don’t remember those officials complaining about Globalism before it entered this new phase of not growing for ever and ever.

In the UK, the British Chambers of Commerce slashed their forecast for economic growth this year to 0.1%. Eighteen months ago, Osborne told us all that his assumptions were based on 2.1% for 2012 going into 2013. Unemployment now stands at 2.65 million.

But it’s Australia that, in my view, is about to join the Crocks Club bigtime.

In Australia, house prices last month fell at the fastest rate since 2006, as buyers gradually realised that prices have become a tad mental. When you consider that there were interest rate cuts as well, it’s clear which way the wind is starting to blow. The situation isn’t helped by the fact that Treasurer and all-round pillock Wayne Swan is in charge of economic policy. As recently as a few months ago, he was maintaining the line that the expenditure cuts simply reflected the ‘logic’ that “if you are Keynesian on the way down, you have to be Keynesian on the way up”. But as it has become clear that the economy, with the exception of the mining sector, is no longer on the way up, Swan has effectively abandoned this position. Instead, in Wayne’s World the pre-Keynesian view is being taken that, if weak economic growth leads to lower government revenue, the appropriate solution is to cut spending even harder. One wonders if Mr Swan ever reads a newspaper, beyond looking to find out if he’s been caught out at yet another scam.

The mining community, by the way – without whom Julia Gillard wouldn’t be Prime Minister at all – may be buoyant at the moment, but that won’t last: its main customer, China, is heading for a keen-brakes slowdown…and represents over 75% of Australian mining’s business. link to original article


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