Collapse of the Global Economy

A “Monetary Stalingrad” is on Its Way to Europe

February 17, 2009

With journalists like Ambrose Evans-Pritchard and at least two other colleagues at The Telegraph this newspaper sports the most knowledgeable financial journalists in print of any UK newspaper. Little, if anything can be learned from those in other broadsheets and the tabloids offer mere escapism. Nor is financial education much better on the radio or TV. The BBC’S Robert Peston is laughably overrated and followed by the ignorant in the media as well by the public. He is always behind the economic curve. Only Max Keiser’s satirical programme “The Oracle” offers “a late night” realistic view of world economics on the BBC.

Europe’s loans to Eastern Europe’s states within and outside the EU is going to cause the next world economic storm - and that is still while the US and UKs’ banks are bankrupt and their debts are bankrupting their countries. Latvia’s economy along with most UK and US banks is “clinically dead” and the Bank Austria and its Italian owner is facing “a monetary Stalingrad”. Depending which figures one wants to accept Germany’s gross domestic product shrank between 8 to 9 per cent in the last quarter! Ireland and several other EU countries are effectively bankrupt! The storm could hit within days or weeks. Major political upheaval and change will ensue.

Europe’s Economic Slump Deeper Than Expected

February 15, 2009

The International Herald Tribune - Europe sank even deeper into recession than the United States in the closing months of last year, according to figures published Friday, as finance ministers of leading industrialized nations gathered in one of the worst-affected countries, Italy, for discussions on the crisis.

In the fourth quarter, the economy of the countries sharing the euro declined by 1.5 percent, according to the European Union’s statistics office. That is even worse than the 1 percent decline in the U.S. economy during that period, compared with the previous quarter.

“Today’s data wipes out any illusion that the euro zone is getting off lightly in this global downturn,” said Jörg Radeke, an economist at the Center for Economics and Business Research in London...

Japan Faces ‘Unimaginable’ Contraction

February 9, 2009

FT - Japan’s economy faces an “unimaginable” contraction, the chief economist of its central bank warned on Monday, as figures revealed surging bankruptcies and a big fall in machinery orders...

Violent Unrest Rocks China as Crisis Hits

February 1, 2009

PTI - The collapse of the export trade in China has left millions jobless and set off a wave of violent unrest in the country. Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to an independent research that paints an ominous picture for the world economy, The Sunday Times reported on Sunday.

The research was conducted for the newspaper over the last two months in three provinces vital to Chinese trade - Guangdong, Zhejiang and Jiangsu. It was found that the global economic crisis has scythed through exports and set off dozens of protests that are never mentioned by the state media.

According to the report in the Southern province of Guangdong, three jobless men detonated a bomb in a business travellers' hotel in the commercial city of Foshan to extort money from the management. All along the coast, angry workers besieged labour offices and government buildings after dozens of factories closed their doors, without paying wages and their owners went back to Hong Kong, Taiwan or South Korea.

In Southern China, hundreds of workers blocked a highway to protest against pay cuts imposed by managers. At several factories, there were scenes of chaos as police were called to top creditors breaking in to seize equipment in lieu of debts. In Northern China, television journalists were punished after they prepared a story on the occupation of a textile mill by 6,000 workers. Furious local leaders in the city of Linfen said the news item would "destroy social stability" and banned it.

VIDEO: Violent Unrest Rocks China

Protectionism, Unemployment and Riots as the Global Slump Deepens

February 9, 2009

MoneyWeek - We are facing “a global jobs crisis”, said Juan Somavia, head of the International Labour Organisation (ILO). As the worst global downturn since the war tightens its grip, employers across the globe have been swinging the axe in earnest. Last Monday alone saw over 70,000 jobs cut by seven companies across Europe and the US. Spain lost almost 200,000 jobs in January, a record monthly jump. Jobless claims are now at around 3.3 million, a 47% rise from November.

Ireland’s unemployment rate has almost doubled to 9.2% in a year. China estimates that 20 million migrant workers, or one sixth of the total, have lost their jobs over the past few months. According to the ILO, worldwide unemployment could rise by 50 million to 230 million this year – a 27% rise from 2007 levels. The potential social and political fallout, said the ILO, is “daunting”...

IMF Says Advanced Economies Already in Depression

February 7, 2009

Bloomberg - Advanced economies are already in a "depression" and the financial crisis may deepen unless the banking system is fixed, IMF Managing Director Dominique Strauss-Kahn said...

Japan on the Edge of the Abyss

February 3, 2009

Naked Capitalism - The Japanese industrial production data and METI forecast was bad beyond all imagining. Industrial production might fall by 1/3 in the 12 months ending in January. It could fall in a mere four months between November and February by more than half the U.S. Great Depression decline which took almost four years...December industrial production came in down 9.6%, worse than the METI forecast. It is now down almost 21% year over year. METI forecasts a further 4.7% decline in February. The inventory to production ratio soared again. Maybe METI will be correct. If it is, Japan industrial production will have fallen 28% (non annualized) in four months. It will have fallen by a third in about a year. Nothing in the history of major nations compares. A 28% decline in four months would be more than half of the entire decline in U.S. industrial production over the 3 years and nine months of the U.S. Great Depression...