Economy On Hold
Economies all over the world are back-tracking their expectations, attempting to cope with a history-making downturn in the global financial system. The world's most powerful economic engine burped up a stomach-churning mess of undercooked mortgages giving heartburn to financial markets everywhere. Well, this is a global economy, and who best to look to for stability in the marketplace than the world's largest market?
There is no disappointment so keen as misplaced trust. Trust that the experts, the professional investment brokers, the financial institutions, the lending and mortgage banks knew their system inside out, had complete confidence in its auditing viability, the firmness of its liquidity to back up its paper promissory notes. When, in reality the situation became so opaquely complex that no one quite knew how to interpret it.
But it seemed to be working so nicely, chugging along, creating wealth - or at the very least the illusion of wealth - for so many people, so pleased with their clever manipulation of a flexible tool to create ever more opportunities and the accumulation of worthless paper, offering opportunities to the public at large to enhance their lifestyles beyond what they ever imagined they could, through credit.
Credit, of course, that had no substance behind it, no guarantees, no reasonable back-up. That's all history, of course. The present is where alarmed and frightened governments have been hustling to avert even greater damage to their economies, as their treasuries begin to sag. Hoping to ensure that an Icelandic collapse will not descend on their undeserving nations.
It doesn't seem all that long ago that China, and India close behind, were roaring into prime positions as the world's new economic engines. Their ingenuity, low-cost production, entrepreneurial skills, vast workforces shoved them into prominence and gave them the inside edge on production and export across the world, as one country after another scrambled to import cheap goods, from food to plastics to electronics.
All of a sudden, that's collapsed, and a lightning-struck world looks on confused as assets crumble and trade has come to a screeching halt. Asian exporting giants, so comfortable in their previous roles, are now scrambling to support themselves, their huge marketplaces, their job-hungry populations. China must produce an annual growth rate of 8% to enable it to create sufficient jobs to occupy the millions of its people who join the workforce year after year.
Its boom has busted, and now China is forced to pledge itself to itself, initiating a government treasury bail-out of almost $600-billion to boost flagging employment with infrastructure initiatives, with attempting to persuade newly spending-averse Chinese to make purchases and increase fluidity. The government has slashed its interest rate dramatically, and it has lowered its anticipated growth target for the very good reason that it has no other choice.
Simply put, the export phenomenon that put China on a trajectory toward realizing its goal of becoming one of the world's largest and strongest economies has suffered an abrupt set-back. Global demand has evaporated, for all those Chinese products that pop up everywhere on the world market. The almost-universal credit freeze that is impacting countries' GDPs everywhere, has dumped the Chinese export market.
It's a temporary situation in China as it is elsewhere, but the country faces real challenges in supporting a growing unemployment base and a huge population of disaffected jobless. The tens of millions of rural job migrants so highly dependent on export-related jobs will now be forced to return home; no jobs, no income, no immediate relief from the reality of a collapsed economy.
The result is an international hiatus, a globally painful waiting game for survival.
There is no disappointment so keen as misplaced trust. Trust that the experts, the professional investment brokers, the financial institutions, the lending and mortgage banks knew their system inside out, had complete confidence in its auditing viability, the firmness of its liquidity to back up its paper promissory notes. When, in reality the situation became so opaquely complex that no one quite knew how to interpret it.
But it seemed to be working so nicely, chugging along, creating wealth - or at the very least the illusion of wealth - for so many people, so pleased with their clever manipulation of a flexible tool to create ever more opportunities and the accumulation of worthless paper, offering opportunities to the public at large to enhance their lifestyles beyond what they ever imagined they could, through credit.
Credit, of course, that had no substance behind it, no guarantees, no reasonable back-up. That's all history, of course. The present is where alarmed and frightened governments have been hustling to avert even greater damage to their economies, as their treasuries begin to sag. Hoping to ensure that an Icelandic collapse will not descend on their undeserving nations.
It doesn't seem all that long ago that China, and India close behind, were roaring into prime positions as the world's new economic engines. Their ingenuity, low-cost production, entrepreneurial skills, vast workforces shoved them into prominence and gave them the inside edge on production and export across the world, as one country after another scrambled to import cheap goods, from food to plastics to electronics.
All of a sudden, that's collapsed, and a lightning-struck world looks on confused as assets crumble and trade has come to a screeching halt. Asian exporting giants, so comfortable in their previous roles, are now scrambling to support themselves, their huge marketplaces, their job-hungry populations. China must produce an annual growth rate of 8% to enable it to create sufficient jobs to occupy the millions of its people who join the workforce year after year.
Its boom has busted, and now China is forced to pledge itself to itself, initiating a government treasury bail-out of almost $600-billion to boost flagging employment with infrastructure initiatives, with attempting to persuade newly spending-averse Chinese to make purchases and increase fluidity. The government has slashed its interest rate dramatically, and it has lowered its anticipated growth target for the very good reason that it has no other choice.
Simply put, the export phenomenon that put China on a trajectory toward realizing its goal of becoming one of the world's largest and strongest economies has suffered an abrupt set-back. Global demand has evaporated, for all those Chinese products that pop up everywhere on the world market. The almost-universal credit freeze that is impacting countries' GDPs everywhere, has dumped the Chinese export market.
It's a temporary situation in China as it is elsewhere, but the country faces real challenges in supporting a growing unemployment base and a huge population of disaffected jobless. The tens of millions of rural job migrants so highly dependent on export-related jobs will now be forced to return home; no jobs, no income, no immediate relief from the reality of a collapsed economy.
The result is an international hiatus, a globally painful waiting game for survival.
Labels: China, Crisis Politics, Economy
posted by Pieface | 2:38 PM
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