Don't rely on China to keep the world economy going
If China's economy falls, the rest of the world goes with it
What keeps this world economy turning around?Skip to next paragraph
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Not the US. America’s private sector isn’t spinning at all. It’s stuck…dead in the water…out of gas…pumped out…
GDP growth is reported at 1%. But that’s almost all government transfer payments and stimulus deficits. Real growth is negative.
And all the recent reports show it is getting worse. Wall Street is cutting earnings estimates…strategists reduced their S&P 500 targets 8%.
…corporate tax receipts have decelerated sharply…
…the president’s job bill is DOA in Congress…
…retail sales are slowing…
…and prices are softening, with the core CPI headed below 2%.
As we keep saying, there is nothing unusual about this. It’s just what you’d expect in a Great Correction. And it will probably get much worse.
How about Europe, then? Maybe Europe is providing the steam to keep things moving.
Uh uh. Moody’s just downgraded French banks… It assumed they would lose 60% on their Greek debt holdings. But the banks themselves have only written off about 20%. And then there’s the Italian debt. And the Spanish debt.
They’ve got a long way to go. And it’s all down.
Merkel and Sarkozy may pledge to keep the olive countries from defaulting. But where will they get the money? France is deep in debt too. And the German economy has stopped growing all together. Not to mention that German voters are just about fed up. They won’t pay for the Greeks to take early retirements forever.
Europeans are becoming old, tired pinchpennies. Just like Americans. They’ve got a social welfare system they can’t afford — just like Americans. And they’re going broke — just like Americans.
What they don’t have is a huge, expensive, aggressive military. Americans regard their armed forces with pride. They see the Pentagon as their greatest strength. Actually, it is their biggest weakness. All told, the imperial agenda costs the US $1.2 trillion per year. Ultimately, both Europeans and Americans may be forced to tighten their social welfare belts.
But can the Americans off-load their ammunition belts? We don’t think so. There are two parts to the human character, said the ancient Greeks. There is appetite and spirit. Appetite is logical, goal-oriented, material…and sensible. But the spirit is mad. It is concerned with symbols…atavistic impulses and the length of God’s arms. The spirit sets off on the road to Hell. The appetite shows it how to get there.
But we are getting off the subject. What keeps the world economy going, we asked? Europe is stuck in the mud. The US is exhausted.