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Warning: Recessions spreading worldwide …
Money and Markets
Martin D. Weiss, Ph.D.
9/14/2015
Excerpt:
All over the world and one after another, economic miracles are turning to nightmares, stock markets are crashing, and governments are losing control.
I’ve recently been to Brazil and China. I’ll be in Russia next week. I talk frequently to friends in Western Europe, North Africa and South Asia. And I can tell you flatly:
Moreover, it’s now more than just a canary in the coal mine for the U.S. economy; it’s starting to impact us more directly.
It’s reducing U.S. exports … cutting the foreign earnings of U.S.-based multinationals … raising the specter of a global recession … and beginning to spread fear to U.S. stock investors.
To see exactly how, let me take you on a whirlwind world tour.
Our first stop is …
Brazil. It’s the second-largest economy in the Americas, with a bigger GDP than Italy, India, Russia, Canada or Australia; and it’s also the emerging market suffering from the most perfect storm.
Brazil is where I went to high school, got married 46 years ago, and have visited at least that many times since. One side of our family in Brazil was very close to the former president and also knows the current one; the other side hates them both.
Regardless of political persuasion, however, all are in shock. No one expected Brazil’s economic decline to hit this hard and this fast.
At first, they thought it was just a passing phase, triggered mainly by a corruption scandal at Petrobras, the national oil giant caught red-handed in a national bribery network involving some of Brazil’s largest companies.
But then came sweeping federal investigations, dragnets and arrests of prominent CEOs. These, in turn, paralyzed new contracts for construction, forced massive layoffs and helped drag the whole economy down.
Still, no one dreamed that corruption and politics alone would be enough to do lasting economic damage, and they were right in this sense: There are other, even more damaging, forces at work.
Biggest losers among U.S.-based multinationals: General Motors, ExxonMobil, Texaco, Cargill and Ford, plus a long list of others, including many of America’s largest banks.
Our second stop is …
Canada, America’s biggest trading partner in the world.
Quietly and without much fanfare, it has just slipped into an undeniable, clearly-defined recession — two consecutive quarters of outright economic contraction.
Moreover, the deterioration of Canada’s economy is not just a recent phenomenon. Over the past nine years, Canada’s ranking among all OECD countries has slipped across the board — down from 10th to 7th in terms of employment, from 7th to 12th in GDP per capita, and from 13th to 18th in household debt.
All these numbers — and more — are now the worst since the 2008 debt crisis. And with commodity markets — especially oil — still slumping, any hopes for a prompt recovery are sorely misplaced.
......................................
SOURCE: http://www.moneyandmarkets.com/
View the complete article, including images, at:
http://www.moneyandmarkets.com/warni...9#.VfcPuJdQrSg
Money and Markets
Martin D. Weiss, Ph.D.
9/14/2015
Excerpt:
All over the world and one after another, economic miracles are turning to nightmares, stock markets are crashing, and governments are losing control.
I’ve recently been to Brazil and China. I’ll be in Russia next week. I talk frequently to friends in Western Europe, North Africa and South Asia. And I can tell you flatly:
- People are in shock, groping for answers, searching for someone to blame, often contemplating radical steps — either to rebel or to escape.
- The progression from boom to bust is taking place far more quickly than anyone dreamed possible just a few months ago.
- And it’s accelerating.
Moreover, it’s now more than just a canary in the coal mine for the U.S. economy; it’s starting to impact us more directly.
It’s reducing U.S. exports … cutting the foreign earnings of U.S.-based multinationals … raising the specter of a global recession … and beginning to spread fear to U.S. stock investors.
To see exactly how, let me take you on a whirlwind world tour.
Our first stop is …
Brazil. It’s the second-largest economy in the Americas, with a bigger GDP than Italy, India, Russia, Canada or Australia; and it’s also the emerging market suffering from the most perfect storm.
Brazil is where I went to high school, got married 46 years ago, and have visited at least that many times since. One side of our family in Brazil was very close to the former president and also knows the current one; the other side hates them both.
Regardless of political persuasion, however, all are in shock. No one expected Brazil’s economic decline to hit this hard and this fast.
At first, they thought it was just a passing phase, triggered mainly by a corruption scandal at Petrobras, the national oil giant caught red-handed in a national bribery network involving some of Brazil’s largest companies.
But then came sweeping federal investigations, dragnets and arrests of prominent CEOs. These, in turn, paralyzed new contracts for construction, forced massive layoffs and helped drag the whole economy down.
Still, no one dreamed that corruption and politics alone would be enough to do lasting economic damage, and they were right in this sense: There are other, even more damaging, forces at work.
- Crashing global commodity prices are gutting Brazil’s export revenues. Brazil’s currency, the real, is down by over a third this year alone.
- Foreign investment capital has dried up, while domestic capital has fled the country. And …
- Just last week, the country’s credit rating was downgraded to junk, catching investors by surprise, sending the currency into a nosedive, and threatening to deepen a recession that’s already Brazil’s worst recession in 25 years.
Biggest losers among U.S.-based multinationals: General Motors, ExxonMobil, Texaco, Cargill and Ford, plus a long list of others, including many of America’s largest banks.
Our second stop is …
Canada, America’s biggest trading partner in the world.
Quietly and without much fanfare, it has just slipped into an undeniable, clearly-defined recession — two consecutive quarters of outright economic contraction.
Moreover, the deterioration of Canada’s economy is not just a recent phenomenon. Over the past nine years, Canada’s ranking among all OECD countries has slipped across the board — down from 10th to 7th in terms of employment, from 7th to 12th in GDP per capita, and from 13th to 18th in household debt.
All these numbers — and more — are now the worst since the 2008 debt crisis. And with commodity markets — especially oil — still slumping, any hopes for a prompt recovery are sorely misplaced.
......................................
SOURCE: http://www.moneyandmarkets.com/
View the complete article, including images, at:
http://www.moneyandmarkets.com/warni...9#.VfcPuJdQrSg
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