The Numbers That Could Keep You Up at Night
After the 2008 stock market crash, Washington, D.C. became even more insufferable than it already was. Its smug liberals kept congratulating themselves on saving America from an economic collapse, but new data shows they only postponed Judgment Day.
On Friday, several economic indicators sent a warning sign that the economic collapse is almost here. To put it mildly, the numbers don’t look good. They tell a story of an economy plagued by weakness and indecision.
Here are a few of the worst indicators:
- China Slowdown Spreads Past Mainland: Our first indication of an impending economic collapse came from the Far East. Hong Kong’s economy contracted in the first quarter of 2016, shrinking 0.4% from the previous quarter. Economists had been expecting growth to remain positive, but have those glorified fortune-tellers been right about anything? Another quarter of negative growth would put Hong Kong officially in a recession. It is yet another piece of evidence that China’s crash is on the horizon. (Source: “Hong Kong’s Economy Unexpectedly Contracts in First Quarter,” Bloomberg, May 13, 2016.)
- Eurozone Outlook Worsens: Those of us who really pay attention to economic data have noticed a weird pattern that should concern everyone. Government officials have a system of cloaking the economy’s weakness when they have something to hide. First, they publish really bullish estimates on the economy. Next, they “revise” those estimates downward by a few points so the “official” numbers will look better by comparison. After a few weeks, even the “official” number is revised downward. For instance, eurozone officials just clarified that the European economy didn’t actually expand at 0.5% in the first quarter of 2016—it was more like 0.4%. But they could keep lowering those numbers in the future. It’s a sleazy trick. (Source: “Eurozone growth estimate revised down a notch,” BBC News, May 13, 2016.)
- Britain’s Got the Blues: Political landmines are another reason the global economy is tanking, and there’s no better proof of that than in Britain. The upcoming referendum on whether or not to stay in the European Union is causing a lot of uncertainty. During the month of March, construction spending fell by 3.6% in the U.K. It’s fairly obvious that businesses are sitting on their cash until the result is clear. (Source: “UK construction sector suffers sharp slowdown,” The Guardian, May 13, 2016.)
Dear readers, if you should take away anything from this article, let it be this: there are no safe havens anymore. The entire world economy is being dragged down by rogue central bankers and their political cronies.
All major economies are slowing, but unlike 2008, China won’t be here to save the day. That’s right—although liberal policymakers in D.C. try to take credit, it was really Chinese demand that kept the world turning.
And how did China keep its economic engine running? With credit, of course! Chinese corporations borrowed heavily to prop up economic output after 2008, spending money that they didn’t really have.
It was a good run, but the government is now realizing how dangerous credit can be.
If there’s one dangerous thing the world learned from us, it was the seductive power of credit. Central banks have been following the Federal Reserve’s lead by printing money around the clock, buying up all the debt in sight.
There are consequences to that kind of irresponsible behavior. It means that all the so-called growth we’ve seen in recent years is hollow. There’s no doubt this kind of system is going to come crashing down—the only question is when?