Sunday, October 16, 2016

The Global Economy Is Mean Reverting
In The Post-Credit-Bubble World
"A weaker currency generally makes for cheaper exports, so one might assume that the falling Yuan over the last year would be good for Chinese sales. But that would be wrong. In September Chinese exports contracted 10% year over year, even as the Yuan fell almost 8% in trade-weighted terms .. Of course this is not just China-specific. Competing exporters like South Korea and Taiwan have reported disappointing numbers as well. This is about a broad global downturn in consumption and investment .. And the slump is unlikely to be a short or shallow. After 20 years of reckless credit pumping, the world is now working through an epic payback/write-down/write-off phase that is likely to be secular (more than one business cycle) in duration .. Waiting for the good old throw-away days of endless spending, mal-investment and under-saving to return soon, is a bad plan."
- Danielle Park
link here to the article

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