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Global Economic Perfect Storm?



June 27, 2012 – Comments (1)

A growing chorus, including Dr. Doom (Nouriel Roubini), is starting to make noises that we are headed for global, economic Armageddon. There is a coming confluence of evil economic forces that will combine and destroy us all, or so goes their collective judgment. Well, perhaps, but you might be better advised to consult a Magic 8 Ball , since economics is a social science and not a mathematical science. Still, it is difficult to ignore their thoughts.

Falling BRICs

These adolescents were yesterday's wunderkind giving the global economy a strong boost, but no longer. These economies have ceased their rocket-like climb, and will be lucky to avoid a recession. Yes, this includes China.

Eurozone Merry-Go-Round

Watching the soap opera that is the EU is kinda like going to the circus, only not as funny. Whether or not one or more of the PIIGS exit the Euro is beside the point: most of these are already in recession and have unemployment in excess of 20%, and are threatening to take the rest of the Eurozone with it, including the Exchequer (read: Germany).

Weak US Economic Recovery Getting Weaker

Up until recently, current US GDP growth was projected to be a sickly 2% to 2.5%. Current projections put this already measly number down to 1.7%. Plus, unemployment is not expected to go below 8% in the near term.

Fiscal Follies (US)

For the past few years, the US gov't has been running budget deficits in excess of $1 trillion, an astonishingly large amount of debt to accumulate in just one year. Economists and assorted pundits are beginning to wonder how long this can continue, despite an insatiable international appetite for American paper.

Global Debt

All economic entities are being seen as taking on dangerously large amounts of debt: sovereign gov'ts, central banks, commercial banks, industry, and even consumers. So much total debt will suppress any and all economic activity.

In Conclusion

Well, there really isn't one. I suppose if all of the above come to pass at the same time, we might be in store for a global depression, not just another recession were some are doing OK, will others in hot water. Color me skeptical.


1 Comments – Post Your Own

#1) On June 28, 2012 at 1:20 AM, awallejr (37.00) wrote:

Sorry but Roubini's crediblity is gone.  He has threatened a double dip recession for years now and it hasn't occurred. He has scared people out of a market that has, hmm, let's see, DOUBLED IN PRICE.

Listen to the naysayers and stay in Tbills collecting a pittance.

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