Awful as Greece’s GDP has been, it doesn’t do justice to the economic fiasco. Take new vehicle registrations: in August, they plunged 46.7% from prior year. Only 3,886 new vehicles were sold. A collapse of 80% from August 2008 at the cusp of the crisis. For the first eight months of 2012, sales were down 42% from prior year, and 65% from 2008. People have stopped buying new cars. And not just cars.
CEOs believe the next six months are going to be tough; and they’re reacting to it by slashing capital expenditures and jobs. These ugly trends “reflect global demand flattening out, particularly in Europe and China,” said Boeing CEO Jim McNerney. The numbers are evoking the dark days of 2009 and double-digit unemployment. It’s been a steep and bumpy slide.
This has got to be the icing on the Japanese cake. The website of the Japanese Ministry of Finance, more specifically the FAQ page on government bonds, has been catapulted to stardom on Facebook and Twitter. Not in a good way. It asks the question: “In case Japan becomes insolvent, what will happen to government bonds?” And then, incredibly, it answers with a terse action plan for when the Big S hits the fan.
Spain has enough problems: a debt crisis, a hangover from a housing bubble, unemployment of over 25%, youth unemployment of over 50%, massive demonstrations against “structural reforms” that the government is trying to implement in its desperate effort to keep its chin above water…. And now it has a new one: the possible breakup of the country. The military has already chosen sides.
“Japan’s experience is a sobering real-world reminder of why forceful and timely action is appropriate,” said the Fed’s Eric Rosengren in his desperation to rationalize QE3. It would be a flood of money, not the “muted” response from Japan to two decades of stagnation. “Appropriate fiscal policies”—even larger deficits—should be used to battle Japanese-style stagnation. Alas, no developed country has done that for longer and to a greater extent than … Japan. And no developed country is in deeper trouble.
A pact with the devil—that’s now the official metaphor for the European Central Bank’s “unlimited” bond purchases that are supposed to save the Eurozone. Bundesbank President Jens Weidmann himself referred to it when he discussed the “dangerous correlation of paper money creation, state financing, and inflation.” But it’s too late. Germany has cracked in two. And part of it has embraced that pact with the devil.
There has been anecdotal evidence. But now GE’s quandary confirms it: the toughest creature out there that no one has been able to subdue yet, the inexplicable American consumer, has apparently accomplished a miracle: putting the screws to runaway health-care costs that are taking over the economy and that are bankrupting the country. Motive? Profit.
Ben Garrison, Cartoonist, on Romney BEN GARRISON www.grrrgraphics.com
What got lost in the escalating Japan-China scuffle was an unassuming national holiday in Japan on Monday that symbolizes in the most respectful manner the slow-motion economic tsunami rolling over the country: “Respect for the Aged Day.” And this time, the young generations are paying the price.
When the German Constitutional Court nodded with a stern smile on the ESM bailout fund and the Fiscal Union treaty, the world, or at least the politicians at the top, breathed a sigh of relief. After months of verbal warfare, the German revolt was over. But steam is billowing once again from the rusty pipes of the Eurozone. This time in France, where the Fiscal Union treaty has been silenced to death—and it could blow apart the whole construct.