Wednesday, Apr 23, 2008
Why a global recession is a possibility
MoneyWeek: Why a global recession is a possibility
"...there is enormous connectivity between all the world’s economies... it would be wrong to assume that the present financial crisis, whose epicentre is the United States, couldn’t be followed by financial and economic crises elsewhere."
Posted by damien @ 10:15 AM (450 views) Add Comment
4 Comments
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1. whiteknight said...
China and India look A-OK to me.
China could just lend the money it sends abroad to its own population (if it really wants to mess things up like we have) to sustain demand.
Otherwise .... shock!!! horror!!! it could accept a recession..... find out that it is a necessary part of the process to regenerate for future growth and stop slavishly being stupid and following this economic thing called growth at all costs.
2. uncle tom said...
The problem that most developed countries have to come to terms with, is that much of the 'growth' seen this century has been an illusion - growth fuelled by budget deficits, trade deficits and consumer over-spend.
Real growth in per capita GDP is achieved through the use of advancing technologies that enable us to achieve more for less effort.
Since the turn of the millennium, the only new technological advances of note have been recreational and medical, which have little positve impact on GDP.
The only factor that has really impacted GDP growth this decade has been the better deployment of the information technologies that were developed in the 1990's, but the scope for further GDP growth from that factor is limited.
The re-balancing of the global economy will not be achieved without cost to the developed world. The cost of a wide range of commodities, not to mention manufactured goods, will become permanently higher relative to the incomes of those living in developed nations.
It follows that we need to come to terms with the prospect of a near term fall in GDP, and the likelihood that it will be no higher in 20 year's time than it is today.
3. japanese uncle said...
Financial bosses and wizkids who deceived investors and the public by devising new form of window dressing called off-balance accounting and snatched collectively billions of pounds of money paid as salary/bonus on that basis, must all refund those money and be jailed.
4. also sold to rent said...
I think the possibility is there but as Faber points out himself, the odds are small. I think China will both sustain and be sustained by those resource rich countries. A sort of cheap goods for oil swap. Unfortunately that leaves us out in the cold as consumers of oil who have no cheap goods to sell.