Global Recession 2012Global Double Dip Recession of 2012
In what can only be described as a sordid continuation of the Global Financial Trainwreck that started way back in 2007, the world this Monday morning is staring squarely down the barrel of a severe double dip recession.
With so many problems left over from 2007-09 that were merely swept under the rug, now made even worse by the poorly executed financial unionization of Europe and insistence on draconian austerity, the return to recession that many major economies around the world began experiencing in 2010 and 2011 is approaching a tipping point from which terminal velocities are becoming a real risk. What this means is that the double dip recession now spreading around the world could experience another falling-off-the-cliff phase, similar to, and potentially even worse, than what occurred in 2008.
It now appears that the world is indeed falling into another Global Recession in 2012, and given how sub-par the global recovery has been, it is probably fair to call it a Global Double Dip Recession, and that is being generous: the pattern since 2007 is consistent with a Long Depression, with some countries, such as Greece & Spain, really in a Great Depression.
Great Depression 2 Risk OnIt is a matter of semantics, but in the interest of keeping verbiage similar to what is being used in the media, I will refer to the risk of a new Great Depression as a "new Great Depression" - but the irony is not lost on me (the word "depression" was replaced with "recession" after the 1930s, so that talk of future downturns would not immediately cause nasty flashbacks for the people who had just endured that Great Downturn).
Calling the 2007-? downturn "Great Recession" is semantics. It has been a doozy of a downturn, call it whatever you like.
But when we are speaking of a "Second Great Depression" we are holding back that moniker for what has been a real risk ever since the wheels started coming off the world economy in a very big way back in 2007: that the world tailspins in an out-of-control credit contraction that may last over a decade, or even decades.
When GW Bush spoke back in 2008 of acting to prevent a "Greater Depression," this is what he meant, without getting into the very gory details.
As it is, the world's major economies have already been in varying degrees of a liquidity trap since the Global Financial Crisis (2008) hit, and only made worse by austerity measures.
It is looking that Greater Depression is back to "risk-on," and investors are starting to wise up. Watch stocks this week, as just one place to see what I mean.
The Wheels Start Coming Back off Global Economy in 2012
It is clearly now more than just a mere slide back into a garden variety recession that the world is now facing, and the wheels are coming off.
"History does not repeat itself, but it does rhyme," wrote Mark Twain. Things are not unraveling like they did in 2007/08, but unraveling the are.
European Stocks Seen Sharply Lower on Spanish Fears
European stocks are expected to open sharply lower on Monday amid concerns over the ability of Spain’s regions to pay their debts. On Friday, Spanish stocks fell by nearly 6 percent on news that Valencia had requested aid from the Spanish government to help it meet debt repayments.
As Asia opened on Monday, stocks in Hong Kong fell sharply on news that up to six Spanish regional governments would request aid. Catalonia, Castilla-La Mancha, Baleares, Murcia, Canary Islands and possibly Andalusia are struggling to deal with their debt redemptions according to the Reuters news agency...
Earnings Show Recession May Be 'Fast Approaching'
While this quarter's earnings reports have crossed a substantially lowered profit bar, future expectations through the year indicate a recession could be on the way.
Estimates for the third and fourth quarters have been dropped to levels not seen since the days of the 2008 financial crisis, below even the muted 2 percent expected level of inflation.
That's an ominous recession sign for an economy that has barely managed to attain positive growth this year even with the strong level of earnings beats, according to an analysis by Nicholas Colas, chief market strategist at ConvergEx in New York.
"Revenue estimates for the back half of 2012 have been slowly working their way lower this year," Colas said. "This trend, however, has accelerated to the downside over the past 30 days and we are fast approaching levels where these estimates are unambiguously pointing to the risk of a U.S./global recession later into 2012 and 2013." ...
Real Danger of a New Great Depression