Post by unlawflcombatnt on Jan 28, 2008 21:05:23 GMT -6
from Bloomberg:
Global Recession Risk Grows as U.S. `Damage' Spreads
By Rich Miller
Jan. 28, 2008
"The U.S. economy may already be in recession; other countries might not be far behind.
Japan, Britain, Spain and Singapore, which together represent about 12% of the world economy, are vulnerable as fallout from the U.S. worsens their economic weakness. Even emerging markets, including China, are likely to suffer as exports to the U.S. wane.
The result: Global growth may decelerate close to the 3% pace economists deem a worldwide recession, from a 4.7% rate in 2007. `
`Some form'' of global recession ``is inevitable at some point,'' former Federal Reserve Chairman Alan Greenspan said....last week.
The developing slump puts pressure on central bankers in Japan, the U.K. and the Euro region to follow the lead of Fed Chairman Ben S. Bernanke, who last week accelerated interest- rate cuts in the U.S. with an emergency move to lower the benchmark rate by three-quarters of a percentage point. Policy makers may follow that with another cut of as much as half a point after a two-day meeting that starts tomorrow, futures trading indicates....
Jim O'Neill, chief economist at Goldman Sachs Group Inc. in London, says....``The economy is slowing everywhere"....
Stocks retreated in Europe and Asia today, led by commodity producers and banks, on growing concern the global economy is slowing and companies may report more losses linked to subprime mortgages....
A worldwide recession doesn't require a global contraction in output, which rarely happens; economists at the International Monetary Fund say it would take a slowdown in global growth to 3% or less. By that measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002.
The contagion from the U.S., which according to the IMF represents about 21 percent of the global economy, is spreading via multiple channels. Less spending by American consumers and companies reduces demand for imported goods. The meltdown of the U.S. subprime-mortgage market has pushed up credit costs worldwide and forced European and Asian banks to write down billions of dollars in holdings. Tumbling U.S. stock prices are dragging down markets elsewhere....
``We'll see more collateral damage,'' says Allen Sinai, chief economist at Decision Economics in New York. ``The risk of a global recession is rising.''....
Japan's economy is particularly at risk. Its housing market is slumping as stricter building-permit rules drag home starts to a four-decade low....
A drop in construction demand led Tokyo Steel Manufacturing Co., the nation's biggest maker of steel girders, to lower its profit forecast Jan. 22.
It's ``highly likely'' Japan is already in a recession or will enter one this quarter, Tetsufumi Yamakawa, chief Japan economist at Goldman in Tokyo, wrote in a report published today.
The yen's 13 percent rise versus the dollar in the last six months is also taking a toll. The Japanese currency reached a 2 1/2-year high of 104.97 to the dollar last week. That is near the break-even point for Japan's exporters, who say they can remain profitable as long as the currency is weaker than 106.6....
Kozo Yamamoto, head of the ruling Liberal Democratic Party's monetary policy panel, urged the Bank of Japan to cut its benchmark interest rate, already the lowest in the industrialized world at 0.5%.
``Concerns over a recession are emerging not only in the U.S., but in Japan as well,'' Yamamoto said in a Jan. 23 interview. ``The BOJ should cut rates back to zero immediately.''....
Singapore may already be in a recession. Its economy contracted for the first time in 4 1/2 years in the 4th quarter as factory output slowed and electronics exports dropped. The cooling local real estate market worsened the slowdown for financial services firms.
Housing is also slumping in the U.K., where loans for home purchases dropped to a two-year low last month....
Retail sales fell in December by the most in 11 months...in the U.K.....
``It's a gloomy picture for the consumer,'' says James Knightley, an economist...in London. ``The prospect of recession is becoming more realistic.''
Retailers Tesco Plc and Marks & Spencer Plc this month called for interest-rate cuts to help consumers, who have 1.4 trillion pounds ($2.76 trillion) of debt....
Spain is also grappling with a housing boom gone bust....Spain's No. 2 lender, predicts property prices will fall this year and building permits will drop 25 percent.
With more than 18% of gross domestic product coming from construction, Spain's economy is particularly susceptible to weakness in real estate....
With other European countries, including Germany, showing signs of slowing, European Central Bank President Jean-Claude Trichet faces pressure to abandon his tough anti-inflation stance and cut interest rates....
Hopes that China's fast-growing economy can take up the slack from a U.S.-led slowdown seem misplaced.
``If there is weakness in the world economy, the impact on the Chinese economy will be very serious,'' says Yu Yongding, director of the Chinese Academy of Social Sciences and a former adviser to the central bank....
In Davos, Klaus Kleinfeld, chief operating officer of Alcoa Inc., the world's third-largest aluminum producer, said he foresees ``a difficult year. I don't think the world can decouple itself from what's happening in the U.S.''"
Global Recession Risk Grows as U.S. `Damage' Spreads
By Rich Miller
Jan. 28, 2008
"The U.S. economy may already be in recession; other countries might not be far behind.
Japan, Britain, Spain and Singapore, which together represent about 12% of the world economy, are vulnerable as fallout from the U.S. worsens their economic weakness. Even emerging markets, including China, are likely to suffer as exports to the U.S. wane.
The result: Global growth may decelerate close to the 3% pace economists deem a worldwide recession, from a 4.7% rate in 2007. `
`Some form'' of global recession ``is inevitable at some point,'' former Federal Reserve Chairman Alan Greenspan said....last week.
The developing slump puts pressure on central bankers in Japan, the U.K. and the Euro region to follow the lead of Fed Chairman Ben S. Bernanke, who last week accelerated interest- rate cuts in the U.S. with an emergency move to lower the benchmark rate by three-quarters of a percentage point. Policy makers may follow that with another cut of as much as half a point after a two-day meeting that starts tomorrow, futures trading indicates....
Jim O'Neill, chief economist at Goldman Sachs Group Inc. in London, says....``The economy is slowing everywhere"....
Stocks retreated in Europe and Asia today, led by commodity producers and banks, on growing concern the global economy is slowing and companies may report more losses linked to subprime mortgages....
A worldwide recession doesn't require a global contraction in output, which rarely happens; economists at the International Monetary Fund say it would take a slowdown in global growth to 3% or less. By that measure, three periods since 1985 qualify: 1990-1993, 1998 and 2001-2002.
The contagion from the U.S., which according to the IMF represents about 21 percent of the global economy, is spreading via multiple channels. Less spending by American consumers and companies reduces demand for imported goods. The meltdown of the U.S. subprime-mortgage market has pushed up credit costs worldwide and forced European and Asian banks to write down billions of dollars in holdings. Tumbling U.S. stock prices are dragging down markets elsewhere....
``We'll see more collateral damage,'' says Allen Sinai, chief economist at Decision Economics in New York. ``The risk of a global recession is rising.''....
Japan's economy is particularly at risk. Its housing market is slumping as stricter building-permit rules drag home starts to a four-decade low....
A drop in construction demand led Tokyo Steel Manufacturing Co., the nation's biggest maker of steel girders, to lower its profit forecast Jan. 22.
It's ``highly likely'' Japan is already in a recession or will enter one this quarter, Tetsufumi Yamakawa, chief Japan economist at Goldman in Tokyo, wrote in a report published today.
The yen's 13 percent rise versus the dollar in the last six months is also taking a toll. The Japanese currency reached a 2 1/2-year high of 104.97 to the dollar last week. That is near the break-even point for Japan's exporters, who say they can remain profitable as long as the currency is weaker than 106.6....
Kozo Yamamoto, head of the ruling Liberal Democratic Party's monetary policy panel, urged the Bank of Japan to cut its benchmark interest rate, already the lowest in the industrialized world at 0.5%.
``Concerns over a recession are emerging not only in the U.S., but in Japan as well,'' Yamamoto said in a Jan. 23 interview. ``The BOJ should cut rates back to zero immediately.''....
Singapore may already be in a recession. Its economy contracted for the first time in 4 1/2 years in the 4th quarter as factory output slowed and electronics exports dropped. The cooling local real estate market worsened the slowdown for financial services firms.
Housing is also slumping in the U.K., where loans for home purchases dropped to a two-year low last month....
Retail sales fell in December by the most in 11 months...in the U.K.....
``It's a gloomy picture for the consumer,'' says James Knightley, an economist...in London. ``The prospect of recession is becoming more realistic.''
Retailers Tesco Plc and Marks & Spencer Plc this month called for interest-rate cuts to help consumers, who have 1.4 trillion pounds ($2.76 trillion) of debt....
Spain is also grappling with a housing boom gone bust....Spain's No. 2 lender, predicts property prices will fall this year and building permits will drop 25 percent.
With more than 18% of gross domestic product coming from construction, Spain's economy is particularly susceptible to weakness in real estate....
With other European countries, including Germany, showing signs of slowing, European Central Bank President Jean-Claude Trichet faces pressure to abandon his tough anti-inflation stance and cut interest rates....
Hopes that China's fast-growing economy can take up the slack from a U.S.-led slowdown seem misplaced.
``If there is weakness in the world economy, the impact on the Chinese economy will be very serious,'' says Yu Yongding, director of the Chinese Academy of Social Sciences and a former adviser to the central bank....
In Davos, Klaus Kleinfeld, chief operating officer of Alcoa Inc., the world's third-largest aluminum producer, said he foresees ``a difficult year. I don't think the world can decouple itself from what's happening in the U.S.''"