HSBC fears world recession with no lifeboats left
JP Morgan estimates that the US economy contracted at an rate of 1.1pc in the first quarter, far worse than originally supposed. |
The Fed thought the windfall gain of cheaper energy for everybody else would weigh more in the balance, but this time Americans have chosen to salt away the money. Net saving jumped by $125bn to $728bn in the first quarter. There was no pick-up in April. Retail sales were flat. |
Much now depends on China, where the economy is starting to look "Japanese". Dario Perkins from Lombard Street Research says the Chinese economy is in a much deeper downturn than admitted so far by the authorities. It probably contracted outright in the first quarter. Electricity use has turned negative. Rail freight has been falling at near double-digit rates. What began as a deliberate move by Beijing to choke off a credit bubble has taken on a life of its own, evolving into a primordial balance-sheet purge. |
Mr Perkins said China is now in a "classic debt deflation spiral" as excess capacity holds down prices. Factory gate inflation is now minus 4.6pc. This in turn is tightening the noose further by pushing up real borrowing costs. |
HSBC fears world recession with no lifeboats left - Telegraph
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Sal
When the Roads and Paths end, learn to guide yourself through the wilderness
Beyond the Path