Don't worry, Mother Nancy Self-Superior is back on the job. She said so this morning.
On May 22, 6:29 am, "\"Lone Wolf\"" <[email protected]> wrote: > World economy in freefall > By Andre Damon > 22 May 2009 > > Governments of the world's major economies announced staggering first- > quarter contractions in the past few days, as real indicators of the > economic crisis continue to worsen. > > Mexico was the latest country to post a huge decline in the first > quarter, announcing Wednesday that its economy shrank by 8.2 percent > compared to a year ago. This is the steepest fall since the peso > crisis of 1995 brought the country to the brink of insolvency and > works out on an annualized basis to a 21.5 percent free fall. > > This followed Tuesday’s announcement that the Japanese economy > contracted 4 percent in the fourth quarter, the worst downturn since > 1955, and a stunning 15.2 percent annualized contraction. The Japanese > economy had shrunk by 3.8 percent in the previous quarter. > > Last week Germany announced that its economy had also fallen by 4 > percent in the first quarter, the sharpest contraction since the > government began keeping quarter-to-quarter figures in 1970. Germany, > whose export-led economy is heavily dependent on external demand, was > only the worst-affected of the major eurozone economies, all of which > registered significant declines. > > Only Monday, Jean-Claude Trichet, president of the European Central > Bank, had said on behalf the Organization for Economic Cooperation and > Development that the downturn had reached an “inflection point.” > Working largely from stock market performance and confidence figures, > Trichet hinted that an upturn is right around the corner. > > “In all cases we see a slowing down of the decrease in GDP. In certain > cases you see already a picking up,” Trichet concluded. The latest > batch of GDP figures certainly do not lend credibility to this > prognosis. > > Official figures released Friday indicated that the eurozone > contracted by 2.5 percent in the first quarter, compared to 1.5 > percent in the last quarter of 2008. > > The figures involved are staggering. As the Financial Times Lex column > pointed out: “If the German economy continues to shrink at this rate, > it will be a fifth smaller by the end of the year, entirely reversing > the decade and a half of growth since unification.” > > The economies of Eastern Europe are being pulverized, with the latest > statistics indicating that Slovakia, the newest EU member, saw its > economy contract by 11.2 percent in the first three months of the > year. > > Mexico, Germany, and Japan are among the United States’ largest > trading partners, together accounting for over half a trillion dollars > in yearly trade with the US. Prior to the downturn, American imports > neared three trillion dollars per year and constituted a major force > in driving production abroad. > > US merchandise imports fell by over 30 percent in the first quarter of > 2009 compared with the same period a year ago, according to the Wall > Street Journal. In 2006, the US had a current account deficit of over > $800 billion, which has now narrowed to $500 billion. Rising > unemployment, falling home values and mass foreclosures have prompted > significant declines in the consumption of foreign goods, including > cars and consumer products. Mexican auto production, much of which > goes to the US market, has fallen by over 41 percent, according to the > Wall Street Journal. > > The downturn has shattered the complex web of international > production, leaving producers in the global supply chain completely > cut off from information on how much to produce. > > “You actually had to pick a number with no knowledge whatsoever, > because nobody knows anything,” said one electronics parts > manufacturer interviewed by the Wall Street Journal. Following the > announcement of the fall in Japanese output, Sony said that it would > cut its global supplier network in half to compensate for reduced > demand. > > Foreign direct investment shrank by 15 percent last year, according to > a report published Wednesday by the United Nations. Supachai > Panitchpakdi, secretary-general of the UN Conference on Trade and > Development (UNCTAD), said that the decline in foreign investment > would be “far deeper” than last year's. > > Meanwhile global stock market and financial profits have continued > their rally. In the past three months, all major world stock indexes > have sharply increased. The FTSE All-World index has risen by over 40 > percent since March. > > Over the past three months, the US NASDAQ has gained 16.88 percent, > the European FTSE Eurofirst 18 percent, The Japanese Nikkei 24.91 > percent, and the Taiwanese Hang Seng 35.44 percent. The Vanguard > Financials index, meanwhile, has outperformed all of these, shooting > up by 42 percent since March 6. > > As the Financial Times pointed out in a column Thursday, the recovery > of stock markets is linked to the trillions of dollars in cash that > central banks around the world have pumped into circulation. “Markets > are being swamped by a wall of money unleashed by governments and > central banks, causing a re-run of the speculation that drove indices > ever higher two years ago. At some point this must drain away...If the > hope is artificial, the disappointment is likely to be real.” > > The US alone is set to pump nearly $15 trillion into the financial > system, according to a recent Deutsche Bank report. The major > developed countries have taken similar initiatives, injecting untold > trillions into finance while real economies suffer the greatest > ravages since the 1930s. > > The program of the Obama Administration—the impoverishment of working > people through layoffs and restructuring, together with huge subsidies > to finance—has, with certain caveats, become the modus operandi of the > governments of all developed countries. In the counties with high > external deficits, such as the US, Spain, and the UK, this has the > effect of transferring contraction abroad. > > But the surplus countries are responding no more rationally. Michael > Pettis, a finance professor at Beijing’s Peking University, writes in > Thursday's Financial Times that a number of Asian exporters, > particularly China, are attempting to offset falling world demand by > boosting industrial production. > > “These investment-oriented policies raise consumption indirectly, by > boosting production, and so although they temporarily boost growth, > they cannot result in a sufficiently large increase in domestic net > consumption to replace American buying. What is worse, in some cases > these policies will sharply constrain future domestic consumption, > just when it is needed most.” > > In short, while the US elite wants to go back to huge profitability > through the impoverishment of millions and a consequent reduction of > the current account deficit, China seeks to restore profits through > the buildup of unsustainable manufacturing capacity. These two > policies are set on a collision course, but their mutual outcome will > be the same: impoverishment of workers in the importing countries, > huge unemployment, overcapacity and deepening economic crisis for the > exporters. > > These processes, developing within a world economy in free fall and > alongside drastically rising unemployment, augur social upheavals all > over the world. --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
