Wall Street Journal Scares Asia
For Asian businessmen and traders, The Wall Street Journal Asia is a a must read every morning before the markets open. That’s why I had a bad feeling last night when I went on line to see that the important Outlook section of the Journal featured this headline–”U.S. Warning Signs Point Towards A Deep Recession”. This morning the Indian Stock Market is down over 7%, the Japanese Market down over 4% and the Hong Kong Market falling 5.5%. Here are the lead two paragraphs in the Journal article:
The U.S. has suffered recessions only twice in the past quarter century and both were short and mild. There are good reasons to fear that the looming recession, if it arrives, could be worse.
Housing is in the midst of its worst downturn since at least the 1970s. That has led to a meltdown in the mortgage market; with financial firms struggling to make sense of their losses, they are making it harder for even credit-worthy borrowers to get loans. The combination of heavy debt loads, still-high energy and food prices and a weakening job market has households tightening their belts. Consumer spending, long a bulwark of the economy, is faltering.
As I am writing this, the plunge is now moving west as Germany falls 7% and Brazil is down 4%. The U.S. consumer has been far too important in the growth of the BRIC’s (Brazil, Russia, India and China) to retain the fantasy that the world was “decoupling” from the U.S. Economy. If the Journal is right and the U.S. recession is severe, the rest of the world will suffer alongside us.
One could say that the rest of the world has been suffering at the hands of the US for several generations.
To suffer ‘along side’ the US is somewhat of a promotion.