The World In Depression: Living With Crisis (Many articles concerning many countries have been posted below) SIGNPOSTS OF A FURTHER DECLINE AND WEAKENING ... all you have to do is open up your eyes and look to see the global economic crisis unfolding. #1 The Bank for International Settlements has issued a new report which warns that dangerous new asset bubbles are forming which could potentially lead to another major financial crisis. #2 Argentina has missed a $539 million debt payment and is on the verge of its second major debt default in 13 years. #3 Bulgaria is desperately trying to calm down a massive run on the banks that threatens of spiral out of control. #4 Last month, household loans in the eurozone declined at the fastest rate ever recorded. #5 The number of unemployed jobseekers in France has just soared to another brand new record high. #6 Economies all over Europe are either showing no growth or are shrinking. Italy’s economy shrank by 0.1% in the first three months of 2014, matching the average of the three previous quarters. After expanding 0.6% in Q2 2013, France recorded zero growth. Portugal shrank 0.7%, following positive numbers in the preceding nine months. While figures weren’t available for Greece and Ireland in Q1, neither country is showing progress. Greek GDP dropped 2.5% in the final three months of last year, and Ireland limped ahead at 0.2%. #7 A few days ago it was reported that consumer prices in Japan are rising at the fastest pace in 32 years. #8 Household expenditures in Japan are down 8 percent compared to one year ago. #9 U.S. companies are drowning in massive amounts of debt, but the corporate debt bubble in China is so bad that the amount of corporate debt in China has actually now surpassed the amount of corporate debt in the United States. #10 One Chinese auditor is warning that up to 80 billion dollars worth of loans in China are backed by falsified gold transactions. What will that do to the price of gold and the stability of Chinese financial markets as that mess unwinds? #11 The unemployment rate in Greece is currently sitting at 26.7 percent and the youth unemployment rate is 56.8 percent. #12 67.5 percent of the people that are unemployed in Greece have been unemployed for over a year. #13 The unemployment rate in the eurozone as a whole is 11.8 percent - just a little bit shy of the all-time record of 12.0 percent. #14 The European Central Bank is so desperate to get money moving through the system that it has actually introduced negative interest rates. #15 The IMF is projecting that there is a 25 percent chance that the eurozone will slip into deflation by the end of next year. #16 The World Bank is warning that now is the time to prepare for the next crisis. #17 The economic conflict between the United States and Russia continues to deepen. This has caused Russia to make a series of moves away from the U.S. dollar and toward other major currencies. This will have serious ramifications for the global financial system as time rolls along. #18 Of course the U.S. economy is struggling right now as well. It shrank at a 2.9 percent annual rate during the first quarter of 2014, which was much worse than anyone had anticipated. As for the United States, whether the level of our debt-fueled short-term economic activity goes up a little bit or down a little bit is not what is truly important. Rather, the fact that we are nearly 60 trillion dollars in debt as a society is what really matters. The same thing applies for the globe as a whole. Right now, the citizens of the planet are more than 223 trillion dollars in debt, and too big to fail banks around the world have at least 700 trillion dollars of exposure to derivatives. (1) Workforce shortages and surpluses worldwide are becoming so acute that they threaten $10 trillion of world GDP over the next one to two decades... The impact of the labor imbalances worldwide will be neither simultaneous nor uniform. Here are some of the crippling shortages and chronic surpluses that the world will face: Germany will see a shortage of up to 2.4 million workers by 2020 and up to 10 million by 2030 — 23 percent of the labor supply. The country will not reach its historical GDP growth rates unless it takes action soon. Brazil will have a shortage of up to 8.5 million workers in 2020; by 2030, that figure could increase nearly fivefold to 40.9 million people — at 33 percent of the labor supply, more than 10 percent worse than Germany’s and the highest projected 2030 shortage of the 25 nations studied. China is expected to have a surplus of 55.2 million to 75.3 million workers by 2020. By 2030, that surplus could reverse sharply, turning into a shortage of up to 24.5 million people. The U.S. is expected to have a surplus of between 17.1 million and 22 million people in 2020. By 2030, it will still face a surplus — at a minimum, 7.4 million. France, Italy, and the UK, all projected to have single-digit surpluses in 2020, face labor shortages by the subsequent decade. South Africa faces the gloomiest prospects, with a projected surplus of 36 percent in 2020 that’s expected to grow to 39 percent by 2030. (2) Goldmans June Final GLI (Global Leading Indicator) came in at 3.1% year-over-year, down from the revised 3.3% year-over-year reading in May. Momentum came in at 0.15% month-over-month - flat from last month’s revised reading... The 3 big drivers of the deterioration were Japans Inventory/Sales ratio worsened, US Initial Jobless Claims were marginally higher, and... The Baltic Dry Index continued to come in softer as well. US data, they argue, has been improving (though we note US Macro surprises at 2-month lows), but improvement has yet to show up in a more convincing way in the broader, global dataset (which) came in at 3.1% year-over-year, down from the revised 3.3% year-over-year reading in May. Momentum came in at 0.15% month-over-month - flat from last month’s revised reading... The 3 big drivers of the deterioration were Japans Inventory/Sales ratio worsened, US Initial Jobless Claims were marginally higher, and ... The Baltic Dry Index continued to come in softer as well. (3) Commodities are getting a demotion from foreign-exchange strategists. Banks from JPMorgan Chase & Co. to Citigroup Inc. are reducing the weighting given to exports in their currency forecasting models as policy makers tighten their grip on financial markets. Traditional commodity currencies, such as those of Canada, Australia, New Zealand and Norway, have become decoupled from exports by the most in as much as 13 years. “The breakdown in correlations has been significant,” Niall O’Connor, an analyst at JPMorgan in New York who specializes in tracking trends in trading patterns, said... “It’s central-bank talk that’s really become the catalyst for price action.”... The delinking of commodity prices and the currencies of nations that rely heavily on exporting raw materials is upending one of the most established relationships in global markets... The correlation between Australia’s dollar and the price of iron ore fell to minus 0.75... the biggest disconnect in data going back to 2009. A reading of minus 1 would mean they’re moving in separate directions; positive 1 would mean they’re in lockstep. Last July, the correlation reached 0.83. Iron ore accounts for about half the economy of the mineral-rich state of Western Australia and fell last month to an almost two-year low of $89 per dry metric ton. New Zealand’s dollar is this year’s best performer in a group of 10 peers tracked by Bloomberg Correlation-Weighted Indexes, strengthening 6.6 percent. The kiwi has rallied even though prices for dairy products, the country’s biggest exports, fell 19.5 percent this year, the most since the first half of 2012, an Australia & New Zealand Banking Group Ltd. index shows. The link between Norway’s krone and oil broke down in May for the first time in more than a decade as this year’s 5.8 percent surge in crude failed to prevent the currency tumbling 2.3 percent versus the dollar. The correlation reached minus 0.06 on July 1, the biggest divergence since 2002. After 10 years of moving in the same direction, the relationship between oil and the Canadian dollar was turned on its head in March, with the correlation reaching minus 0.16 that month, the most negative since 2001. (4)
Posted on: Sun, 06 Jul 2014 09:53:54 +0000