ECRI — Predicting the ISM and Markit PMIs

Is the trade war beginning to bite the global economy, to which most countries are coupled? A leading indicator suggests that this may be developing.

ECRI
Predicting the ISM and Markit PMIs

Ambrose Evans-Pritchard — HSBC fears world recession with no lifeboats left

Stephen King from HSCB warns that the global authorities have alarmingly few tools to combat the next crunch, given that interest rates are already zero across most of the developed world, debts levels are at or near record highs, and there is little scope for fiscal stimulus.

"The world economy is sailing across the ocean without any lifeboats to use in case of emergency," he said.

In a grim report - "The World Economy's Titanic Problem" - he says the US Federal Reserve has had to cut rates by over 500 basis points to right the ship in each of the recessions since the early 1970s. "That kind of traditional stimulus is now completely ruled out. Meanwhile, budget deficits are still uncomfortably large," he said....

The US cannot easily launch a fresh New Deal. Public debt was just 38pc on GDP when Franklin Roosevelt took power in 1933, and there were few contingent liabilities hanging over future US finances.

Looks like all we can afford is depression, and, of course, war.

But not to worry, economics is a science.

HSBC's Mr King says the global authorities face awful choices if the world economy hits the reefs in its current condition. The last resort may have to be "helicopter money", a radically different form of QE that injects money directly into the veins of economy by funding government spending.

It is a Rubicon that no central bank wishes to cross, though the Bank of Japan is already in up to the knees.

Lots of data on the global economy in the article though.

Telegraph
HSBC fears world recession with no lifeboats left
Ambrose Evans-Pritchard