http://www.bloomberg.com/apps/news?pid=20601087&sid=ajpuQvkMO.Ds&pos=7 Trichet criticized Greece for being too slow to cut its budget deficit and said the Frankfurt-based central bankâs actions were justified by the crisis in financial markets. âTrichet, who said the current crisis may be worse than the Great Depression, is fending off critics who say the ECB caved into political pressure as the sovereign-debt crisis stirred speculation that Europeâs single currency may break up. .............It is clear that since September 2008 we have been facing the most difficult situation since the Second World War, perhaps even since the First World War,â Trichet said. âWe have experienced and are experiencing truly dramatic times.â
If your neighbor loses his job then it's a recession. If you lose your job then it's a depression. But on a serious note, we are probably looking at a two speed world economy. Many European economies and the US have very poor outlooks for many years to come. Then of course we have the 2nd/3rd world economies that always get slaughtered in any major downturns. This really only leaves India and China as the main contenders, it will be interesting to see where/whom they will have to sell their products to. Of course here in Australia we have the mistro Kevin Rudd and his new 40% Super tax on mining/oil, the only real export advantage that we have, very alarming. So at this point one way or another we are all in the shit up to our ears whether we see it or not! Regards Johno
If you take the entire population of the US and all the population of the European Union, then it still only equals about 10% the population of the world, yet together we are more than half the GDP of the world. Then you have the other 90% fighting over the last 50% Its like having 10 guys in a room with $100 bucks. 1 guy gets 50 bucks and the other 9 guys split up other other $50. Well, it would be very easy for that wealth to switch hands somewhere else. China has enough population that they could have a little "rich area" of 300 million people (the size of the US) and those chinese could buy their own products. There...problem solved for china. It really doesnt matter if China ships their products 10k miles to us, or 10 miles down the street. They are still getting paid for whatever they sell. This illusion that they "need" us is just that...an illusion. What do we have that china wants? Nothing but their 2 trillion dollars that we owe them. The only thing china can buy with their dollars is treasuries, oil & gold, and buying even 50 billion dollars of oil or gold will push the prices up hard and fast. Buying 50 billion of treasuries does almost nothing though.
Not so fast. The market in China for their goods is nil. They don't pay their workers anything. So they have few consumers with any money. That's how their recent economic growth got started. Slave labor meant cheap prices for the world market. If they start paying their workers enough to turn them into consumers, prices will no longer be super low. So, don't think China is some super economy that can support itself. They are the export king because they pay next to nothing to their workers. They need to be able to export to the U.S. and Europe or they go down the tubes too.