US President George W. Bush emerged from the G20 summit Saturday satisfied with having preserved the principles of free market economics, while leaving his successor wide room for maneuverExcuse me, there is a "free market"? As Johnny Carson used to say, "I did not know that!" Would the "free market" apply to the 700 billion dollar bailout of private corporations? The proposed 25 billion dollar bailout of the Big3? The massive agriculture subsidies? I will stop here .... no time to list 'em all :-(
Anyway, the news is that Japan has caught the recession bug:
Japan, the world’s second-largest economy, has officially slipped into recession, hurt by weak export growth and steep cuts in corporate spending amid the worsening global slowdown.The UK got into that even earlier:
Japan’s gross domestic product shrank at an annual rate of 0.4 percent from July to September after declining a revised 3.7 percent in the previous quarter, the government said Monday. It was the first time since 2001 that Japan’s economy has contracted for two consecutive quarters, the definition of a recession
The economy shrank for the first time in 16 years between July and September, confirming that the UK is on the brink of recession. The UK will be classed as being in recession if the economy slows in the fourth quarter as well.In between Japan and the UK, in terms of the largest economies, are Germany and China. So, what is the news from them? Thanks for asking! According to the FT:
On Wednesday, the Bank of England said the UK has probably entered a recession in the middle of 2008 and is likely to continue to contract well into 2009
Germany has officially plunged into recession with economic activity contracting much faster than expected in the third -quarter, intensifying fears about the depth and duration of continental Europe's downturn.You are probably thinking, hey, Germany is the big dog in Europe. So, does it mean that that entire part of the world is in recession? Ah, the power of critical thinking! Doggone it, you are right, says AFP:
Gross domestic product in Europe's largest economy fell by 0.5 per cent in the three months to September, extending a 0.4 per cent drop in the previous quarter, the German statistical office reported.
The 15-nation eurozone fell into recession for the first time ever, EU data showed on Friday, with Europe's economic powerhouse Germany among the hardest hit.Everybody says the same thing: the worst is yet to come. And I am, like, you got to be kidding me! It was almost humorous to read in the following in the Guardian: "But while output is expected to contract next year, the US economy is predicted to lead the way towards recovery." Wait a minute; the US predicted to lead the recovery? How? By printing a few gazillion dollar bills?I don't get this.
Gross domestic product in the economies using the eurozone fell by 0.2 percent in the third quarter after a similar drop in the second quarter, according to the Eurostat figures.
And, you are meanwhile thinking, hey, what about China? You know, I have a pet theory. Let me present it:
For many years now, China's economy has grown at double-digit rates. However, in order to keep inflation under check, among other reasons, the government made sure that a significant surplus created was saved. And it saved that in the US and other places.
This kind of savings created the glut that Bernanke gushed about. Soon, we came up with dizzying schemes to exhaust the savings.
Meanwhile, China's prosperity came from ravaging the environment.
So, here is a thought experiment: we would all have been better off if only China's economy had not grown by leaps and bounds. If, for instance, their average growth rates had only been about six percent, then all the gains from the exports would have accrued pretty much to the Chinese.
No "additional" surpluses that would have resulted in China-dollars that made Americans consume like crazy.
That much of a slower Chinese growth would have also resulted in a significantly lesser environmental impacts.
Which means, in the crisis we have now, we have screwed up the environment for nothing. It is not even as if we have something to show for everything from the Three Gorges Dam to polluted skies to .....
I like my framework here. Not that I am blaming the Chinese for everything that has gone wrong. But, I do wonder about the wisdom in that relentless pursuit of economic growth that merely exported its natural resources as US Treasury notes!!!