Asian Stock Market Crash Trigger?, Great Depression 2

Sunday, June 10, 2012
By Paul Martin

By: Andrew McKillop
Market Oracle
Jun 10, 2012

Logically, a more globalized economy should generate globalized depressions as well as growth surges, that is increased synchronization should be easy to identify in the data: to be sure and certain, the exact opposite reasoning, of compensating de-synchronized regional movements in the economy is used by defenders of globalization. Today, it is Europe which is leading the OECD downward, while in 2008-2009, arguably, it was the USA but at the time the emerging economies of China, India, Russia, Brazil, South Africa, Turkey, Argentina and other large or growing nonOECD economies were completely out of phase with the OECD group, and were growing strongly.

This is no longer the case. The global economy means what the two words mean; regional movement of the economy is therefore more synchronized as the global economy integrates.

The 2008-2009 crisis and near collapse in the OECD group was handled, and is still being responded to as a monetary, fiscal, debt and deficit crisis with other economic strings attached. Called “Keynesian” by some, the response produced keynesian results – the economy stayed down as the national budget deficits and the sovereign debts increased. Inside a globalized financial trading straitjacket, speculation ran wild against any economy judged as weak – starting with the debt of the PIIGS of Europe. Each time the attacked country’s debt increased even more, producing the monstrous and unreal result of Greece, today, having a nominal national debt of about 350 billion euros, which relative to national population and GDP can easily be compared with the US or Japan.

Showing that firewalls and bulkheads still exist in the global finance circus, but more in the mind and less and less on the ground, neither Japan’s debt nor US sovereign debt are treated as out of control, and in the Japanese case this debt is heavily domestic-owned. Instead, the almost ritual daily task of central bankers is to prevent interest rates rising for the hyper-debt countries outside the “safe to attack” PIIGS, whose debt is now a plaything of bond traders from Moscow to Manchester, but with starkly gathering risk strings attached, as shown in the case of Greece and now Spain.

The Rest…HERE

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