I don’t wish to be too alarming. These are stress tests and scenarios not yet reality. But, there is logic in the thought that we currently face the possibility of the final two scenarios happening simultaneously. That is, a Western recession triggered by European and US austerity (not to mention financial tumult) and a Chinese real estate pop.
via IMF stress tests China/Australia bust – macrobusiness.com.au | macrobusiness.com.au.
Forty three months after the recession began in January 2008, almost 5% of the labor force remains unemployed. In 7 of the eleven recessions since World War II, all the jobs lost during the recession were filled within 24 months. What’s happening in this ‘recovery’ is simply unprecedented.
Copper has in the past proved a reliable indicator of the state of the global economy. Now it has gapped through primary support at 8500 and below its trend channel (drawn at 2 standard deviations around a linear regression line) on the weekly chart — warning of a global recession. The 63-day Momentum peak below zero also signals a bear market.
* Target calculation: 8500 – ( 10000 – 8500 ) = 7000
The risks ahead are not just of a mild double-dip recession, but of a severe contraction that could turn into Great Depression II, especially if the eurozone crisis becomes disorderly and leads to a global financial meltdown. Wrong-headed policies during the first Great Depression led to trade and currency wars, disorderly debt defaults, deflation, rising income and wealth inequality, poverty, desperation, and social and political instability that eventually led to the rise of authoritarian regimes and World War II. The best way to avoid the risk of repeating such a sequence is bold and aggressive global policy action now.
via How to Prevent a Depression – Nouriel Roubini – Project Syndicate.
Many ask whether high-income countries are at risk of a “double dip” recession. My answer is: no, because the first one did not end. The question is, rather, how much deeper and longer this recession or “contraction” might become.
…… the dire consequences of soaring risk aversion, against the background of such economic fragility. In the long journey to becoming ever more like Japan, the yields on 10-year US and German government bonds are now down to where Japan’s had fallen in October 1997, at close to 2 per cent. Does deflation lie ahead in these countries, too? One big recession could surely bring about just that. That seems to me to be a more plausible danger than the hyperinflation that those fixated on fiscal deficits and central bank balance sheet find so terrifying.
via Martin Wolf|Struggling with a great contraction – FT.com.
Economic Cycle Research Institute co-founder Lakshman Achuthan: “There’s nothing they’re going to be able to do about that near-term direction in the unemployment rate, especially if we slip into a recession because every time you have a recession by definition the unemployment rate will be spiking.”
… Achuthan says the time to act was in the spring when the economic indicators started to weaken. “We were above 200,000 [monthly payrolls] and we’re not going back there anytime soon,” he says. “We’re going to continue to weaken at least through the end of this year,” which is (more) grim news for the millions of Americans in need of work.
via It’s Too Late For Obama To Create Jobs, Says ECRI’s Achuthan.
