Can We Say the "R" Word Yet?
We've looked at China and Japan lately and you can't miss the fact that their economies are suffering, China's more than Japan's. But why stop there?
Emerging economies, if they aren't already in recession, sure look like they're heading there. China once bought up commodities as fast as they could be produced. Emerging markets that sell those commodities prospered. But with China's economy dwindling (their private, if not public, companies are in certainly in recession), natural resource sales have plummeted. On top of that, these emerging countries borrowed heavily in recent years building up large debt balances, emulating their big brothers in the developed world, where borrowing has exploded since 2008. But that debt is denominated in U.S. dollars. And with the dollar rising mightily against the emerging market currencies, paying back the debt gets more expensive with each passing day. So with falling sales of natural resources, and increasing debt burdens, net revenue continues to slide.
In Europe, despite the occasional claim that such-and-such country's economy has perked up (it's usually Germany), economic activity continues to flounder. Russia's economy, reliant on commodities, continues to sink with the prices of commodities. It's currency has collapsed relative to the dollar even more than the Asian emerging markets. South America? Please. The Middle East continues to be a region where economic progress increases with the price of oil. And you know what's going on with that.
Oh, and remember the BRICS (Brazil, Russia, India, China, South Africa)? They were going to take the world's economy by the horns and take leadership role to rival the U.S. and the West. Haven't heard much about that in a dog's age, have you?
And yet, we hardly hear a peep about this slowing world economy. We continue seeing articles pointing out some ray of sunshine peeping through the clouds, the best example being, perhaps, Greece. Clearly in a state of collapse, the country has managed to stay out of the news. So things must be working out, right? Hardly.
When it comes to the "R" word, the silence is deafening, so much so that we have to wonder how bad is really might be out there.
Emerging economies, if they aren't already in recession, sure look like they're heading there. China once bought up commodities as fast as they could be produced. Emerging markets that sell those commodities prospered. But with China's economy dwindling (their private, if not public, companies are in certainly in recession), natural resource sales have plummeted. On top of that, these emerging countries borrowed heavily in recent years building up large debt balances, emulating their big brothers in the developed world, where borrowing has exploded since 2008. But that debt is denominated in U.S. dollars. And with the dollar rising mightily against the emerging market currencies, paying back the debt gets more expensive with each passing day. So with falling sales of natural resources, and increasing debt burdens, net revenue continues to slide.
In Europe, despite the occasional claim that such-and-such country's economy has perked up (it's usually Germany), economic activity continues to flounder. Russia's economy, reliant on commodities, continues to sink with the prices of commodities. It's currency has collapsed relative to the dollar even more than the Asian emerging markets. South America? Please. The Middle East continues to be a region where economic progress increases with the price of oil. And you know what's going on with that.
Oh, and remember the BRICS (Brazil, Russia, India, China, South Africa)? They were going to take the world's economy by the horns and take leadership role to rival the U.S. and the West. Haven't heard much about that in a dog's age, have you?
And yet, we hardly hear a peep about this slowing world economy. We continue seeing articles pointing out some ray of sunshine peeping through the clouds, the best example being, perhaps, Greece. Clearly in a state of collapse, the country has managed to stay out of the news. So things must be working out, right? Hardly.
When it comes to the "R" word, the silence is deafening, so much so that we have to wonder how bad is really might be out there.
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