Economy in China, Japan, and Europe is Slowing Down

Economic growth in China, Japan, and Europe is slowing down faster than analysts have predicted. This creates an urgent need for policy makers to take action to strengthen these countries’ economies.

The past years, we have all welcomed China’s recent growth with relief, as the rise of the world’s second biggest economy has a beneficial impact on the global economy. But, recently, China’s economy is showing signs of deceleration. What’s worse, the country’s leaders are failing to bolster the economy.  

The Japanese economy is showing a similar pattern. With exports and industrial activity slowing down, the Japanese economy has contracted by 0.4% the second quarter of 2015.

What about Europe? While the euro currency union is still growing, the growth rate in the second quarter is 25% lower than that in the first quarter. Some countries like Spain have a positive growth, while others like French and Italy are facing downhill.

The American economy is doing better. The value of the dollar has increased. However, this makes American goods more expensive for other countries. This could reduce the demand for American exports.

Comments

J. Dow

Maine August 25, 2015

How can there really be an economic recovery, when seven plus years after the crash of 2008, and many years into the so called recovery, we still have a zero interest rate?

Kyle Reising

Watkinsville, GA August 25, 2015

Financial sector bubbles inflate and financial sector bubbles deflate. There is a regularly scheduled cycle coming to a financial market near you with the deflation event TBA. The inflation is met with great fanfare and acclaim about how the economy is humming along nicely. Whistling past the graveyard we call the collapses "market corrections".

Reading comments I find monetary magpies distracted by shiny metal objects claiming this never happened when gold was money. Some say we have too many things and cannot possibly buy more while others claim most people can't afford to buy anything but shoddy goods. Shoddy goods are the culprit in some views. The authors claim it boils down to lack of growth.

I prefer to camp with those who think the whole thing isn't an accident of poor decisions made by over matched leadership. The system is working exactly as it was designed to work. Profits rise to the top and wages fall to the bottom. The globe is awash in cash as financial equity markets are fat with it. These are not market corrections they are a shearing of the sheep. $40/barrel crude only assures you more of the same shoddy coals will be shipped to Newcastle.

The reason we all can't have nice things is the people who make rules for a living have cornered the market on prosperity. There is a massive prosperity red tag sale going on as we speak. It's all Donald Trump's fault for scaring the Chinese and Japanese with those job losses he promises them.

Ed

Old Field, NY August 25, 2015

There should be a playlist of renditions, both classical and modern, of Dies Irae, as the wretched of the markets grasp their heads and twisted bodies in agony. You had time to repent; you saw it coming; you should have taken out side-action. But no!

BritishEUvictim

C.Europe August 25, 2015

How come we don't get to comment on articles by The Editorial Board?

Are they the infallible Popes of the NY Times?

The trouble with cross-border travel in the "EU" is the Schengenzone, another piece of the jigsaw puzzle called the "European Project" - a monstrous mess, unwanted by millions, maybe hundreds of millions.

It is reported that one can buy any sort of weapon in Belgium e.g. Kalashniikovs. What stupid ideas the Schengenzone and the "European Project" are!

But the clique who control the "EU" ignore the wishes of so-called "European Citizens" for a reintroduction of border controls.

Loads of Brits, including myself, boycott French goods as a protest against the "EU".

Is that part of the reason for "Europe's" economic decline?

Do they want Brits like me in their "European Army"?

BritishEUvictim

C.Europe August 25, 2015

The "EU" is still not Europe

Junker was quoted recently as saying that Eurosceptics had no ideas. That is an amazing display of ignorance

A number of highly respected economists have said that Greece should leave the Euro.

They have been ignored as have the wishes of large numbers of "EU citizens".

The "EU" is controlled by an arrogant anti-democratic clique.

The whole thing is built on lies and dictatorship.

It will be interesting to see if the ongoing police investigations in the UK into paedophile activity and violence show that the majority of these politician-paedophiles were "EU"-supporters as my limited knowledge suggests.

Either way, the "EU" has not managed of any sort of sensible action on the Euro, the Schengen disaster, the Lisbon Treaty, the migrants crisis or anything else I can think of.

It is hardly surprising that the "EU", which is an enemy of the people of Europe, should be in a disasterous economic state.

workerbee

Florida August 25, 2015

"America’s economy is in better shape, but it is not growing fast enough to help the rest of the world."

If America's economy is in good shape, as the article's statement is intended to imply, then the U.S. stock market would've held up much better than it did when China's market declined. Instead, the U.S. stock market has slipped to a lower trading level as Wall Street sharks skimmed off billions from the market, significantly reducing the balances of defined-contribution retirement funds.

Mike D.

Brooklyn August 25, 2015

it's time for the editorial board to consider the arguments of Austrian School economists.

No fiat currency has ever, or *could* ever last forever.

This isn't my opinion - it's simply mathematics.

Steve Bolger

New York City August 25, 2015

Every currency that ever was existed by fiat, i.e. social convention.

Lou H

NY August 25, 2015

Austerity, greed and institutionalizing the accumulation of wealth is never a good idea.

Economies and currencies need to grow at least as population and productivity grows. Currencies are a method...gold is closer to bartering, Welcome to the 16th century, again. No thanks.

Antonio Galetti

Italy August 25, 2015

To sell well, we need fair prices and good quality. And those who buy, must have the financial capacity to do so.
If we look at China, we realize now that the communist system has allowed colossal productions at very low prices. It lacked the quality of course, but in some markets, it was not required. Slowly the combination "low quality" at bargain prices entered in the minds of all people. I saw in Russia in a garden the following sign. "Dog biting and chain Chinese"
With the crisis, those who no longer wants to buy a product "disposable" but a product that will last long. This is just one of the reasons for the crisis of China ...
Antonio Galetty - Twitter Ezylykos

jeff f

Sacramento, Ca August 25, 2015

In your recitation of weaknesses spanning the globe you make an implicit but strong case that our political elites, our oligarchs, our bankers, our plutocrats and our bureaucrats don't really know what they are doing and hence deserve having their elite status taken away.

elfarol1

Arlington, VA August 25, 2015

Welcome to the new normal.

George

New York August 25, 2015

At this point, I think it would be possible for a Family Feud round to come with "unsustainable" as one of the Top Five Answers on the board to the 100 people surveyed with the question, "Describe in one word the current world economy."

Was it Mark Twain who said, "We cannot make a living taking in each other's laundry"? Yet, that appears to be where 99 point something percent of us are headed.

Nature Boy

San Francisco August 25, 2015

Why are we afraid? The economic basis of all trade and therefore value is not changed. The currency wars are not important to those without currency. The speculative gamblers calling themselves investors are now seeing that the frothy gains they promise their clients are based in profit and not value. Fear not all you non-investor class workers, the plutocrats will show their colors running panic as their crystal skies start falling.

Jerry Frey

Columbus August 25, 2015

There are no world leaders, except in democracies, the rest are autocrats.

A Common Man

Main Street August 25, 2015

The short term fluctuations in the stock market are generally not correlated with sustained economic movements, up or down. So, whether it is Japan or China or the US, or Europe, let us be more careful when talking about economics.

We all have been trained to believe in the power of economic growth and resulting stock market riches. We never take a step back and ask: What are we gaining from this "sustained" growth. We all want this sustained growth to feed the stock market beast, but never consider "sustainable" growth, or better still, sustainable living for human beings in the world. To me that is an important question that political leaders, business leaders, and people should be asking.

Secondly, we believe that oil at $40 (and declining prices for other commodities) is bad for many economies. Have we ever considered the possibility that higher oil and commodity prices only feed the greed, and the need to destroy our environment to satisfy the consumerism that is so blatantly anti-environment.

By asking for more and more growth now, we are simply accelerating the eventual day of reckoning when we will have to pay the price for "our growth." On that day, I would love to read the editorial board's take on it.

casual observer

Los angeles August 25, 2015

"...After two decades of rapid growth, China’s economy is decelerating and its leaders are failing to strengthen it — by, for instance, decreasing its reliance on investment and putting greater emphasis on consumer demand. In a sign of how quickly business activity is falling, exports declined more than 8 percent in July from June and auto sales were down more than 6 percent compared to a year earlier. Gross domestic product grew at 7 percent in the second quarter, the slowest pace in six years..."

Look back ten years and you will see that this time of economic decline was predictable. China, India, et al grew by selling products to the U.S. with great margins on lower prices because these countries were underdeveloped, with very low per capita incomes, who offered both domestic and multinational manufacturers great opportunities for big profits from exports. They were not developing strong domestic markets over the same time. When the United States showed no growth to support increasing sales, a flood of capital ended up propping up markets, but failing to stimulate more well creation in the U.S. The result were three great bubbles which collapsed in 2007-2008, and the beginning of the process that has led to the current crises. It's going to get worse but the main problems are not going to be addressed, yet. There needs to be better dispersion of the new wealth to stimulate growth in markets. Sustainability and better efficiencies need to be introduced, too.

Eliana Steele

WA state August 25, 2015

To have economies driven by consumption, you need consumers to have money. When consumers don't have money to consume, things do not go well. When governments will not invest in infrastructure to stimulate economies, things slow down. Half the world is escaping hardship through migration. The other half has a small sliver elite of very wealthy and the rest of us slogging around without the political will to make real change. That will not last however.. we just don't know where this will happen and how..

Charles

Long Island August 25, 2015

Let's see. Consumer economies driven by cheap imported goods with their "too good to be true" prices paid for with unemployment insurance, food stamps and borrowed stimulus money resulting from stagnant wages and under-employment because of the outsourced jobs that went to the country that lent us the money which now has a stock market problem. Geesh, is that all?

Pilgrim

New England August 25, 2015

We used to make money in this country by building things. Now we just reach into the next guy's pocket. This explains the wealth distribution in our country. And right about now the 'next guy's pocket' is completely empty or has holes. We're running on both borrowed time and money and this can not go on forever.

This latest scenario is a last squeaky wheel on an inevitable collapsing economy. We've ignored the previous wheels and they've fallen off already. Invest in housing, infrastructure and modernization of transportation today and now. All this capitol can't continue flowing to the top only. Crazy.

On another entirely different thought, as a rapidly aging population mushrooms, exactly how many of us can afford to live much longer?

Alberto

Florida August 25, 2015

China's marxist-leninist leaders neither believe in the role of the market nor understand how it operates, thus it is illusory to think that they will respond in a rational manner to the challenges faced by their economic system. If they continue to run a command economy China will follow the steps of the collapsed soviet economy.

Nevis07

CT August 25, 2015

Well, certainly the world economy is headed for a more difficult time. It's been obvious for some time that China's model was not sustainable and their reliance on debt (as has been the case in advanced economies) can only be stretched so far. But it's not just China's economy that will need restructuring, now much of the world will now try to re-adjust to other markets to export their goods and services to. the United States is by far the most obvious target and that should concern us, especially as we negotiate new trade pacts with Europe and Asia. We should keep this in mind, negative net exports is a direct factor in slowing of our own growth. While the US is a more closed economy than that of much of the OECD, we cannot allow ourselves to become the end-all solution for other countries economic growth. This medium to long term problem will only become more exacerbated as time goes forward. Europe, Japan and China's slowdown will all drag on world economic growth, furthermore, with the reserve world currency and the most likely to increase rates, our net trade situation will most likely only begin to look worse. Perhaps the most troubling thing in all of this is the increased likelihood that market and economic crashes in Russia and China could ultimately lead to those countries leaders lashing out geo-politically. These black swan events are in my estimation the true danger scenarios we should be careful to watch.

Brian Pottorff

New Mexico August 25, 2015

Why does the Editorial Board call the Chinese government communist? It seems to me that, economically speaking, there's a lot of laissez faire cowboyism going on there.

Cheekos

South Florida August 25, 2015

Yes, the U. S. economy is in better shape than many other countries, and our fiscal and monetary policy, at least since The Great Recession, has been managed more appropriately. With today's global inter-connectivity, however, trouble anywhere causes uncertainty to markets everywhere.

That's where the misinformed market pundits, and today's less-sophisticated investors just use the herding instinct as a fall-back position. In essence, they are responding; but, they do not really understand to what, or why!

Unfortunately, many people no longer know how to "read" the markets, lack of on-going curiosity about what is going on around the worlds, and they totally do not comprehend those oh so subtile points: global money flows, variations in inflation, what a strong or weak dollar means, the "yield curve", etc.

Paul

North Carolina August 25, 2015

Weaknesses and problems created by the globalized economy require international solutions to address instability and income inequality. More international cooperation and regulation are needed, in addition to addressing social and economic problems on a national level.

Steve Bolger

New York City August 25, 2015

Good luck with that when governments are expected to compete with each other.

Bill Scurrah

Tucson August 25, 2015

For some time now the world has been awash in cheap consumer products--is it possible that today's slow growth reflects consumption fatigue? I have so much, do I really need to go out a buy more stuff? Certainly demand is low because of lower wages, etc., but don't lower wages come as a result of the capacity to produce far outpacing the capacity to consume? Take the glut of oil and its below 40 dollars a barrel price--sure, a gallon of gasoline costs less, but am I really therefore going to drive much more than I already do? To where?

jeff f

Sacramento, Ca August 25, 2015

Oil is not used just to drive. It is used to fuel and make the many consumer products that we have too much of already.

Uzi Nogueira

Florianopolis, SC August 25, 2015

I understand. China is America's main adversary in this new century. Thus, China bashing --particularly its political leadership -- is newsmedia favorite pastime. However, to point a finger to China's leadership for undermining the global economy is unfair. Shall we briefly review America, Europe and Japan records on that issue?

Weak financial mismanagement in America --1929 and 2009 -- has led the world to two economic depressions and WWII. The historical record speaks for itself.

European politicians decided to expand the integration process too fast and too deep with a premature common currency area. The result is recession, unemployment and a Greek debt crisis with no solution in sight.

Japan's political leadership was forced by the Reagan administration to revalue the yen in late 80s. As a result, it created a real estate bubble when pinched provoked an insolvent banking system. The economy never recovered from that gross exchange rate mistake.

Then we have China, the new kid on the bloc. In a period of three decades, China's political system turned a backward agrarian society into a highly advanced manufacturing superpower. Not a bad record for the CCP leadership.

True. Shanghai stock market is teaching a hard lesson about the complexities of a 21st century global financial industry, particularly the stock market. Great opportunity for American scholars to teach their Chinese counterparts about America's rich experience in that area.

JSB

NYC August 25, 2015

Reporting is not "bashing." Learn to appreciate and value the difference.

WmC

Bokeelia, FL August 25, 2015

Memo to economists, economic policy-makers, and central bankers worldwide: Re-read J. M. Keynes 1936 General Theory of Employment, Interest and Money and follow his recommendations to the letter. No one has come up with a better way to stimulate economic growth. No one.
The only modification needed to update Keynes to address contemporary environmental realities is to steer investment into sustainable enterprises exclusively.

twstroud

Kansas August 25, 2015

Big problem with Chinese consumer economy - not enough ladies. Gents must own a house to get a date. Many invested. Houses kept getting built and falling prices reflect the glut. Result: you now own a house and could get a date but have no pocket change for wining and dining part.

Michael Sherrell

Sebastopol, CA August 25, 2015

GDP per capita is relevant, not GDP. GDP can be increased by sheer population growth, and can go up while standard of living goes down. GDP growth is roughly proportional to environmental degradation, whereas GDP per capita can, with decreasing population, correlate with environmental improvements.

SpecialAgentA

New York City August 25, 2015

But there is no real economic growth, that all petered out beginning in the 1970s. And so capital began financial shenanigans to strip the middle and working class and off shored good jobs to places like China. At this point, industrial growth is not the answer for we are accelerating at warp speed into global ecological ruin. We need a profound reformation and I reckon many thought that was what they were voting for with "Hope and Change". Instead we seem hardwired by establishment elites for complete collapse. The old answers and solutions will simply not do. Look up and read Jimmy Carter's televised address to the nation in July, 1979 on energy and the two paths America then faced. It is as important and prescient a warning as Eisenhower's desperate televised address on leaving office concerning the rise of the Military Industrial Complex. Realize as well that the media is owned by global corporations and have no interest in real answers or real solutions to our escalating crisis.

bd

San Diego August 25, 2015

A rather vacuous editorial that advocates that we do what Japan has done for the past two decades or so; i.e. borrow and spend. NYT doesn't seem to realize that the Keynesian policies implemented in the past seven decades have reached the point of diminishing returns. We have already pulled in much of future spending demand.

GLC

USA August 25, 2015

Dear Editorial Board,

Don't you think that if the policy makers in these troubled countries could come up with credible ways to bolster their economies they would have already done so, and they wouldn't be in the trouble you claim they are in.

Don't be so naïve all the time.

Have a really great day.

marian

Philadelphia August 25, 2015

I would hope the Federal Reserve decides not to raise interest rates right now- at the same time China is having an economic melt down. This too shall pass and there will be better opportunities to raise the rates in future but not now.

Steve Hunter

Seattle August 25, 2015

The fact remains that money must be in the hands of those that spend it which not only includes individuals but politicians/governments who will spend it on infrastructure. The 1% have most of the money which they have used to chase investments in grossly overpriced luxury real estate and stocks whose PE ratios make absolutely no sense. The bubble is bursting and it is long past time to redistribute much of this wealth.

James

Phoenix August 25, 2015

It is always interesting to see the NYT editorial board offer macroeconomic advice. As a business entity, the NYT is struggling, so the notion that a collection of editors have great advice to offer experts is odd. Reflecting that lack of insight is the vague warning at the conclusion about the FOMC adjusting its practices to raise interest rates from 0%. The board offers no evidence that such low interest rates continue to have any effect. Moreover, keeping rates so low means the FOMC has no more arrows in its quiver if things do fundamentally go south. The recent correction gives the FOMC a perfect opportunity to raise rates while the market already has priced in a correction. Waiting simply suggests to the market that the FOMC sees some inherent weakness in addition to what led to the correction. Last, raising the target rate by 25 or 50 bp isn't enough to really affect economic fundamentals; it will, however, at least inform the markets that we're moving back to normal.

Jim

Shreveport August 25, 2015

Thanks for the warning. The most frightening thing here is that all the traditional plans to ward off a recession or slowdown are already in place. We tried the economic stimulus plan and the result was only sluggish growth and more Government debt. the Federal Reserve generally lowers interest rates when they see a recession coming. What will they do this time after keeping interest rates at zero for years. the Chinese economy is also very worrisome. What happens if they decide to stop buying our treasure bills?

cjhsa

Michigan August 25, 2015

The only solution is to get the governments out of the markets. And isolate China.

andy

Illinois August 25, 2015

Anyone who has read the book "Flash Boys" and anyone who knows anything about high frequency trading would be naturally suspicious of the nature of these globalized crashes.

While China's overinflated economy might show signs of real trouble, I am convinced that the rest of the world's stock markets only went down because the HFT algorithms reacted to the Chinese sell-off by unleashing a global stock dump.

Time to be smart and pick up as many American blue chip stocks as we can afford. They will rebound as soon as the "Chinese wave" has passed, since the fundamentals of the majority of America's top companies are still very strong. Fundamentals are one thing that even the magic of HFT cannot change...

Michael

New York August 25, 2015

Governments do not have many options when it comes to the ability to help shore up and halt spiraling economies. Artificially lowering interest rates is a quick fix but should not be the cornerstone of economic policy. The production, sale and trading of oil futures is dependant upon the benchmark of $100 per barrel. Like home values, that is simply reflects what someone will pay. Any Government that intervenes in stock markets and investments does so at its own peril. Our own recent banking debacle can be an example. China can stabilize its own economy and help the world market by a solid plan of growth, jobs , production, R and D and investment. But sadly for the world, that takes time and patience. There is no magic pill that can solve this latest economic crisis.

casual observer

Los angeles August 25, 2015

This entire situation developed because of human folly, nothing else. To succeed at anything we must be prepared to act just right at the right time having the necessary understanding of what to do and the means to do it. Yet, how do we manage our economic lives? We gamble on markets without appreciating the uncertainties and we follow happy thoughts without having a clue as to whether they are at all reliable. We trade the stocks of business enterprises in these stock markets but who cares about the businesses? Instead they ponder the prices of the securities in the aggregate like people who seek out fortune tellers to decide how to make important decisions about their lives, in the hope that they will find a hidden secret to prosperity in the unpredictable movements of the financial markets. The key to economic prosperity has always been in learning how to make more new wealth than one uses up over that time. To do that in our modern world means a lot more people earning more and more over time to support rapid economic expansion. It does not come from somebody accumulating a tremendous amount of wealth and then driving everyone one else to work harder and more productively, but from everyone having plenty of opportunities to make and to live better than they ever had before. If you want to fix the global economy, it requires dispersing a lot more of the new wealth amongst all to enable them to improve themselves. It means appreciating that Wall Street does not make wealth.

Uga Muga

Miami, Florida August 25, 2015

Perhaps China could offset its slack domestic demand and simultaneously boost input-providing countries' GDPs by further accelerating its military buildout and buildup.

blackmamba

IL August 25, 2015

In the fall of 2008, there were no credible generally accepted warning signs of the looming great American recession and bail-out. Indeed, candidate McCain stated that the fundamentals of the American economy were strong the week of the collapse. America has no basis for arrogant judgmental economic prescriptions regarding the economic problems of China, Japan and Europe.

There is no "communist" China in a collective term limited leadership that has been engaged with the world and experimenting with capitalism for decades. While China has the nominal 2nd economy by GDP, with 1.3 billion people on a per capita basis it ranks about 80th. Near Bulgaria and Botswana.

China is aging, has a serious gender imbalance, shortage of natural resources and severe pollution. China's infusion of money and currency devaluation are capitalist tactics. About 8% of Chinese are non-Han in 55 different ethnic groups.

Japan is rapidly aging and shrinking in population. But with a tenth of China's population on a per capita basis the 3rd GDP economy is about 30th. Japan is toying with a rising xenophobic militarism.

The 28 member European Union is an economic alliance and the 19 member Eurozone is a currency pact. But there is no European political union. Europe is aging and shrinking.

Russia, Brazil and Nigeria are dependent upon the price of oil and gas.

America has a massive military-industrial complex and partisan political gridlock.

Economics is not science nor faith.

Joe

Atlanta August 25, 2015

There are over 2 billion people in China, Japan, and Europe. The idea that politicians and economists can "control" the economy of so many disparate, wide ranging individuals, all of whom are trying to better their lives, shows a lot of hubris.

luxembourg

Upstate NY August 25, 2015

It is too bad that the EB did not check with some of its knowledgeable journalists before penning this alarmist editorial, as it contains significant errors.

  • With regards to the claim that China greatly devalued its currency, they only allowed it to devalue, by not intervening in the market, by 2-3%, which is considerably less than fluctuations in the dollar versus euro and yen this year. And on a trade weighted basis, the renminbi has strengthened this year.
     
  • the second big error is in regards to the reporting of the euro area growth rates. They are reported as quarterly growth, not annualized, as is reported in the U.S. Neither is wrong, but to compare them without adjustment is. So the euro area has grown about 0.7% in e first half, or 1.4% annualized. The first half annualized growth in the Us is about 1.5%. When you consider the higher population growth here, it suggests that Europe is doing as well as the U.S. For its citizens.

smford

Alabama August 25, 2015

Almost all the attention in this article is devoted to exports. When conditions are not right for global export-related growth, as now, attention should be shifted to infrastructure improvement, even vast projects such as in the New Deal, but first countries around the world will have to overcome the financial and political power of ruling elites.

chickenlover

Massachusetts August 25, 2015

Many years ago Paul Samuelson noted that "“The stock market has called nine of the last five recessions.”
There is no perfect way to predict markets. What goes up must come down. The idea of eternal growth is a chimera just as belief in eternal youth is.
This does not mean that nothing can be done. Of course there are policies that will stanch today's problems, but these too will be ephemeral.
We have to reprogram ourselves to realize that there are physical, chemical, and biological limits to all that we can do on planet earth.

Gene Horn

Atlanta August 25, 2015

The idea that any government can actually manage their economy through spending more money and taking on more debt is simply false. It doesn't work in the public sector any better than in the private sector even though the government controls the money printing presses. The only issue is timing.

The idea that we can do on a global basis what we can't do on a domestic basis is even more far fetched.

The 3% annual growth in the US economy is based on 2% to 3% annual real inflation. Meanwhile, federal, state and local government expenditures have increased to over 1/3 of the US GDP, with pull through increasing the total impact to over 50%. Of course, this was done with increased debt.

The questions the Editorial Board should answer are: How much further can the US economy be pushed? How do you propose solving the world economy problem?

Lucie McKee

Bennington, VT August 25, 2015

The United States must stimulate its economy by creating job growth hence more buying power within the country, less dependence on foreign sales & improving the well-being of Americans.

Bruce Rozenblit

Kansas City August 25, 2015

The warning signals are not just flashing, they are on full red alert. The world is slipping into a deflationary spiral. The following factors are driving the decline:

The major economic powers are all suffering from aging populations and declining birthrates. This is reducing consumption. Demand is falling off.

Japan and China for both cultural and policy reasons are enormous savers. Internal consumption plays a subordinate role to exports. They don't consume enough to power their economies.

The United States and Europe have gone a budget cutting austerity binge that has greatly reduced public investment and public spending. This lack of spending is reducing growth which pushes us toward deflation. Most of the cuts in the US have been from state and local governments and are huge.

Inequality is spanning the globe which has greatly reduced disposable income. People don't have money to spend which is deflationary. The super rich can't consume the world's output.

The third world is in terrible turmoil. War is everywhere. Poverty is rampant. They have no money to spend. More drag.

Commodity prices are collapsing, especially oil and gas which has triggered a global price war. More deflation.

If ever there was a time for the major powers to undergo big increases in fiscal spending and public investment, this is that time. Debt is not the problem. Deflation is the problem. The evidence is everywhere and all are leaders do is push austerity.

Rahul

Wilmington, Del. August 25, 2015

Spare us, the last time the world leaders tried to save the world, set us up for today. By now even high school students understand that 0 % interest rates create bubbles. You don't always know where the bubble is until it bursts. Don't expect stock brokers to have a dispassionate view of bubbles because they are all on commission and it is not their money. They will keep cheering the central bankers. How soon we forgot when Greenspan was known as the Maestro for bailing us out of the dotcom bubble with low interest rates. It is payback time for 8 years of 0 % interest rates.

Common Sense

New York City August 25, 2015

It looks like China's dream of being an economy based on something other than cheap labor will be on hold indefinitely.